Real Estate Blog: Countdown to BNG in November 2023

We are only six months away from the implementation of biodiversity net gain (“BNG”) requirements in the Environment Act 2021, which will become mandatory at the start of November 2023 and will apply to most development sites with some limited exceptions.

Secondary legislation and regulations, including exemptions, are still evolving, but the government has made it clear that it is happening despite those gaps, and some local planning authorities are already including BNG conditions. Prudent developers are preparing and seeking guidance well in advance to navigate delivery of the minimum 10% biodiversity gain.

Biodiversity Gain Plans – new planning condition

A reminder that developers will be required to submit a biodiversity gain plan to the planning authority and obtain their approval to it as a pre-commencement condition. Practically speaking it may be possible to discharge the condition by submitting the biodiversity gain plan with the application for planning permission, but we won’t know for sure until this plays out. Until the biodiversity gain plan is approved, a developer will not be able to accurately estimate the cost and practicalities of complying with it. A biodiversity gain plan must include details of:

1. steps taken to minimise disruption of existing onsite habitats and any other habitat;
2. the pre-development and post-development biodiversity of the onsite habitat;
3. the biodiversity gain of any registered off-site habitat allocated to the development;
4. any biodiversity credits purchased;
5. any other matters which regulations specify (such regulations not yet having been published).

What can be used to contribute towards BNG?

BNG can be made up of multiple elements and DEFRA published some very general guidance on 21 February 2023 and 2 May 2023 as to what can count towards a developer’s mandatory BNG. It is important to note that BNG will need to be maintained for 30 years and in most cases this is expected to be secured by a conservation covenant which is an agreement between a landowner and the planning authority protected by a land charge.

Will BNG apply to existing applications validated before November 2023?

One key question which has been raised and discussed at length is whether BNG requirements will apply to existing applications. The planning advisory service has issued guidance indicating that this is not the case, but the legislation does not confirm the position and states that BNG requirements will apply from “grant” of permission. Hopefully DEFRA and the government will make the position clear as a matter of urgency. Accordingly, we would advise proceeding with caution and consider each development on a case-by-case basis, depending on how far progressed an application is.

Points for developers to consider

Developers may consider reviewing live contracts, options and promotion agreements that are conditional on planning, to ensure that there are necessary protections to minimise risk on BNG exposure. The main risk being if a contractual planning condition is satisfied without the developer being sure that the BNG planning condition attached to a planning permission is capable of being discharged. Early costs assessments may not have sufficient contingency to cover the cost of delivering the BNG requirement. The cost of credits, for example, are yet to be confirmed.

Going forward, some developers have or are developing an internal strategy addressing BNG on new sites and are discussing BNG at the Heads of Terms stage. For example, it would be prudent to consider:

• whether a landowner has any additional land nearby which could be captured as potential BNG land;
• what effect does BNG delivery have on any minimum price agreed or any target/minimum net developable area?;
• ongoing monitoring of potential BNG land to minimise the risk of the BNG base line increasing or decreasing by way of trashing, especially where the site is partly or fully occupied.

New drafting is already emerging in transactional documents and this will no doubt continue to evolve as secondary legislation is released. Plot sales will also need to include provisions for preservation and maintenance of habitats in the future.