The devil is always in the detail, and this so often only comes at the 11th hour. Biodiversity Net Gain (BNG) is no exception with the mandatory BNG marketplace now in a different place to where it was only a few weeks ago. As one query is answered another two appear in its place.
1. Biodiversity Gain Plan (BGP)
The BGP will be submitted as a post-permission document after planning permission has been granted, for approval by the Local Planning Authority (LPA). It is at this stage that a developer needs to show they are meeting their mandatory 10% net gain.
Last month the Government released further guidance on biodiversity net gain and its role in the planning process. Of particular interest to developers will be the news that they may source their BNG after planning is approved as part of discharging this planning condition before implementation i.e. before works start.
A draft BGP template has been provided by DEFRA which, whilst still subject to change, shows what information may be required. A developer will have to submit a BGP as a post-permission document for approval by the LPA. The BGP must be approved in writing by the LPA before development can commence and if granted it will discharge the mandatory biodiversity net gain condition. The BGP (and the outcome of the determination) will be required to be published on the LPA’s local register.
This document and accompanying guidance provide further points of interest and some items of clarification:
- Developers must produce a minimum of 10% of their net gain onsite before looking elsewhere.
- An LPA may request that a developer produces less ‘significant’ onsite works (after the 10% minimum above) in favour of contributing to an offsite that has been identified as within an ecological network with locally important species. This may mean that higher distinctiveness habitats are encouraged offsite in favour of low distinctive ones onsite although the wording suggests some flexibility in its interpretation.
- The landowner of an offsite Habitat Bank will agree the Habitat Management and Monitoring Plan with the LPA or Responsible Body, the developer should not need to get involved in this aspect.
- It appears that a BNG site will need to be registered on the Natural England register before it is included in a BGP.
- If an offsite is within an LPA’s Local Nature Recovery Strategy (LNRS) it can qualify for an extra 15% bonus on top of units produced by the habitat gain, known as the strategic modifier. Likewise, a development site within an LNRS will have a 15% higher biodiversity value and so require more units than it otherwise would. This has been amended to only apply when producing specific relevant habitats rather than any type of BNG as previously implied. This means it is especially important to understand the LNRS of both the development site and offsite.
2. How much influence will the purchaser’s LPA have on deciding what works are suitable on an offsite?
The current guidance suggests an LPA may give precedence to habitats that fit into their LNRS, but will they be able to reject a site if already approved by a responsible body including other LPAs? If a covenant or s.106 has been implemented on the offsite then the landowner may have committed the land to certain works without yet having sold the units. If an offsite used for a BGP is complying with the metric trading rules in terms of replacing habitats in accordance with distinctiveness and habitat condition, can approval be withheld?
One possible solution would be if a Habitat Bank were allowed to amend the works within it, subject to appropriateness and no net loss of habitat. This would allow for the creation of a wider range of bespoke, ecologically valuable habitats as required. We wait to see what flexibility there might be with a Habitat Bank although so far, the emphasis has been on the commitment to a 30-year plan.
3. Enforcing another LPA’s s.106
If a landowner is offsetting a development site in another LPA rather than their own, it will be interesting to see who enforces a Habitat Bank’s objectives under a s.106. There is no reason to expect issues with a s.106’s enforceability (there is legal precedent) across LPA borders but we will have to see how this plays out in practice and if there is any further guidance.
4. Another LPA creating one’s Habitat Bank
In the voluntary market we have seen a range of preparedness among different LPAs. Certain landowners have been frustrated in their attempts to set up Habitat Banks due to their LPA not having the processes in place to establish these. There is some question over whether an LPA may approve a site as a Bank when located outside their own area of authority. However, as guidance states that Responsible Bodies, which may cover multiple LPAs, may approve Banks, as indeed do National Character Areas (NCA), it suggests that they may be able to do this.
5. LPAs accepting Habitat Bank units from another LPA
Whilst at this point it remains to be seen whether any units from any offsite have to be accepted by an LPA if coming from a registered Habitat Bank. We await further details as to exactly how Banks will in practice operate on a national mandatory basis with the secondary legislation to be published imminently. One can increase the likelihood of receiving approval by considering a range of offsites and we have vendors across England with habitats that are reviewed to ensure that they can make the best use of any LNRS. If required we can also assist developers in reviewing their suitability based on the development site’s LPA’s plans before submitting the BGP, increasing the likelihood of its approval.
6. Option for sale-by-sale bespoke habitat creation
Of course there is still the option of a sale being agreed between a landowner and developer to meet the development’s requirements which on the 15th November, DEFRA confirmed in their “Biodiversity Net Gain for land managers – step-by-step flowchart” could be done without the need to create a Habitat Bank in advance avoiding some of the associated risks.
7. The Government is finally serious about launching mandatory BNG
The Government have released Environment Act 2021 (Commencement No.7) Regulations 2023, backdated to 2nd November. This brings into force provisions of the Environment Act 2021, notably s.98 (biodiversity as a condition of a planning application), s.100 (biodiversity gain site register) and Part 1 of Schedule 14 of the Act. This allows further regulations to be enabled from the Town and Country Planning Act 1990 (c. 8) to be laid before Parliament and to enable the biodiversity metric (defined in paragraph 4(1) of that Schedule) and the making of regulations to provide for a biodiversity gain site register.
We seem to be drawing closer, if rather painfully, to the mandatory BNG market after what was a nervous moment following the Government’s attempts to remove the current Nutrient Neutrality market.
It will be interesting to see if LPAs still having to deal with the voluntary market applications (for those planning applications submitted but not granted before the January deadline) will start adopting mandatory procedures as they are issued in the meantime.
8. Autumn Statement – Nutrient Neutrality (NN) Funding
The 2023 Autumn statement featured a series of measures to ‘unlock’ housebuilding. The most relevant one to the environmental credit market was the announcement of a £110 million fund to deliver “high-quality nutrient-mitigation schemes”, over the next two years. Whilst this gives some comfort to those looking to create their own nutrient mitigation projects as the NN market is likely to stay with us in the immediate future, this fund may also be available to LPAs looking to develop their own mitigation projects. This Local Nutrient Mitigation Fund allows LPAs to set up ‘offsetting schemes’ via costed expressions of interest for projects or strategies delivering mitigation. Whether this would involve an LPA buying land and completing their own works and producing credits or setting up a process for landowners to supply credits from their own projects directly to developers remains to be seen as it seems in the wording that there is potential for both types as long as mitigation to unlock housing development is the outcome. The former would provide direct competition to an open market, whilst the latter may encourage it.
9. NN market competition from Natural England (NE)’s own Mitigation Scheme
Whilst currently only able to acquire units from land owned by wildlife trusts/NGOs for their own Mitigation Scheme offerings, NE are looking at the possibility of buying from private landowners. Only active so far in the Tees with these offerings, NE are carrying out feasibility studies to roll this out in other catchment areas (Stodmarsh, Kent, Wensum Catchment area, Norfolk, and Norfolk Broads wider area).
Effectively NE’s scheme is/will be in competition with those selling in these markets. This suggests that those in these catchment areas, which might be affected in due course, should consider pushing on now with any sales before this competition arrives. There is clear demand in the relevant catchment areas and more vendors are now waking up to the idea that the market for these units will be continuing “as is” for the time being. Furthermore, maybe well past the next General Election, there could be further threats to this market with more attempts to introduce policy changes. So far this was avoided when the Lords voted against a removal of the need for developers to mitigate and buy units. There is a feeling that the current opportunity of a “double whammy” using the same land in the same way for NN mitigation and BNG maybe too good to ignore.
There have now been further developments following DEFRA publishing guidance: “Legal agreements to secure your Biodiversity Net Gain” on the 29th November, a further update on the impact of this guidance will follow.
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