8th January, 2020 by Nicholas James
Prior to the general election, the Environment Bill was making its way through Parliament. Among many other schemes designed to try to reverse the negative effects of everyday life on our environment, the Bill included provision for the introduction of a new mandatory requirement, within the Town and Country Planning Act 1990, for most new developments to provide a net biodiversity “gain” of 10% if the development results in the loss or degradation of habitats.
Whilst it is not known when the Bill will be reintroduced to Parliament, the environment is one of the most pressing issues facing our country at present, meaning it is unlikely to have vanished from the agenda. It is therefore important that developers are aware of how their environmental obligations will change, and how to prepare.
The NPPF currently provides that “planning policy should identify and pursue opportunities for securing measurable gains for biodiversity”; however this is not a binding requirement and remains only guidance.
Despite this, 77 authorities in England have already adopted the new procedure, which is set out at Part 6 of the Bill, and imposes a new condition for all planning permissions. A bio-diversity gain plan must be submitted and approved by the local authority before the development can commence. It remains to be seen whether this additional hurdle will result in delays to development, and this may depend largely on the dealing local authority, but it may be a relief that the passing of the Bill will ensure all parts of the country are adopting like standards.
The principle of a net gain is to “avoid or mitigate harm as far as possible.” The government will publish an updated metric - a tool for measuring and accounting for biodiversity losses and gains resulting from development - to put the ecology of the development into numbers, and measure the changes to biodiversity. In its consultation responses, the government has committed to improving environmental mapping (the process of collecting and visualising spatially referenced data about the environment), and the metric will continue to be updated, although it is not known how frequently.
The burden will be on developers to use the metric to establish how the bio-diversity will increase, by assessing the habitat and reacting accordingly to what will be required (such as using green corridors or planting trees). Developers will also need to submit details of the pre- and post- development biodiversity value, how adverse effects on biodiversity will be contained, and whether any off-site land is being utilised to offset the biodiversity losses on the development land. If the proposals do not achieve the required 10% gain, the developer will have to pay a levy to contribute towards alternative schemes, or may have to purchase biodiversity credits to invest in national habitat creation schemes.
At the consultation stage, concerns were raised that landowners could be encouraged to degrade the habitat before planning permission is applied for, to make the 10% gain easier to achieve; however the response vaguely states the government will introduce legislation to deal with this, and decision makers will have access to baseline data.
Also at the consultation, the 10% figure was addressed. Most respondents supported a mandatory figure, and higher and lower figures were suggested, with the government sticking with 10% as it “strikes the right balance between ambition, certainty in achieving environmental outcomes and deliverability and costs for developers” and the “pressing need to reverse environmental decline.” Some commentators have expressed concern that the 10% could be seen as the maximum effort required, but the government has reiterated that it should not be a cap, and if higher gains are possible these should be pursued by developers. The government does recognise that such obligations will not be viable for all developments, and a simplified assessment is proposed for sites of fewer than 10 residential units or an area of less than 0.5 hectares if not a residential scheme, which will be welcomed by smaller developers.
The Chartered Institute of Ecology and Environment Management is critical of the rigid 10% figure, as if measured over a longer period of time than simply looking at the difference pre- and post- development, what was a 10% gain could in fact become a loss compared with if the site had remained undeveloped, and if proposed bio-diversity gain projects do not have the intended effect.
It may be that developers do very little on-site, as they will want the maximum net developable acreage and units thereon for their site to be profitable – they will not want too much of the site being designated as “biodiversity land”. Opportunistic landowners may see an opportunity to cash in and offer their land for offsetting, but if this is nowhere near the original site, how can this aid the biodiversity in the affected locality? It could be argued the problem is simply being moved elsewhere. A further consideration is the measuring of the bio-diversity itself – will this simply be contained within the development land itself, or will a wider area be considered? For example, one site with a high nesting bird population may in turn contribute towards other areas, such as lakes where those birds visit. Disturbing the first habitat will affect the second, but the line must be drawn somewhere as developers cannot be responsible for a potentially un-ending chain of ecological events.
Landowners may also find themselves dealing with multiple developers and having the upper hand in negotiations, driving up costs and again impacting profitability, which may ultimately be more costly than simply paying the government levy for not achieving a 10% gain, and therefore resulting in no better biodiversity than pre- the Environment Bill.
Potentially viable and necessary sites for development may be abandoned if developers cannot achieve the correct balance of biodiversity and profitability. Ultimately this is good for the habitat but not for addressing the housing shortage.
As a response to the consultation the government has agreed to a transition period of two years.
Despite this, with some sites being tied up under options for many years, developers should now be reviewing their standard form of agreements to ensure they cater for these requirements, as many authorities have already adopted the Bio-Diversity provisions, and given the long-term nature of such agreements, it is highly likely the Environment Act will have been passed by the time developers are ready to submit a planning application.
It would be prudent to ensure all option agreements link the areas reserved for Bio-Diversity gains to “Facility/Infrastructure Land”, ensuring it cannot be taken into account when assessing the extent of net-developable land, otherwise potential liability to pay the levy (or for the offset) may arise and be double counted when assessing the price. Further provisions should be incorporated to acknowledge that a landowner will give additional land if required by the developer to meet its Bio-Diversity obligations, with the potential benefit of reasonably maximising its net developable area within the primary option/developable area, or alternatively the developer must be permitted to purchase land from a third party to fulfil the obligations and such associated costs then to be a deductible. Without this the developer may be barred from entering into arrangements with third party landowners and the developer would either have to front the cost of the levy or walk away.
The Environment Bill will no doubt recommence its journey through Parliament this year and will result in a standardised system of Bio-Diversity obligations, rather than the current system whereby it has only been adopted by certain authorities. Developers should begin to prepare now by ensuring their standard documents deal with the provisions, and ensure thorough research is done before committing to a site.
This is an evolving area of law for landowners and developers alike. Please contact nicholas.james@howespercival.com or a member of the commercial property team if you require any further information or assistance.
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