Biodiversity Net Gain (BNG): Opportunities for Landowners and Hurdles for Developers

This article discusses the biodiversity net gain (BNG) requirements within the Environment Bill (which apply only to England) and will be especially of interest to developers and landowners alike.

As many eagerly await Royal Assent of the Environment Bill (due before the end of this year), it has become clear that the new mandatory BNG requirements will become central to planning and development, and are likely to create both hurdles and entrepreneurial opportunities.

BNG in the Environment Bill: what does it mean?

BNG is an approach to development that results in an increase in the biodiversity value of habitat for wildlife (compared with the pre-development baseline) through habitat creation or enhancement, after mitigating as far as possible.The Environment Bill, if enacted as currently drafted, will require developers from 2023 to deliver a minimum 10% BNG in respect of new development in England where planning permission is granted under the Town & Country Planning Act 1990 (TCPA) regime and under the Planning Act 2008 (nationally significant infrastructure project) regime.Developers will be required to submit, and gain approval for, a “biodiversity net gain plan” from the relevant local planning authority. This must include the developer’s proposed steps to minimise the adverse effect of the development on the biodiversity of onsite and offsite habitats, the biodiversity value of the habitat pre-development and post-development, and demonstrate how at least 10% BNG will be attributable to the development.Developers must also demonstrate how the BNG will be maintained for a minimum of 30 years. The House of Lords has recently agreed an amendment to the Environment Bill which will allow the government to review and increase the duration for which BNG sites must be secured. This is in response to recent criticisms that a 30-year timescale is insufficient.The measure of pre-development and post-development biodiversity value will be based on a metric produced by Defra.The BNG provisions will apply to all development in England, with the full list of exemptions to be set out in secondary legislation. These exemptions will include, but are not limited to, permitted development and marine development. Of particular significance was the government’s recent amendment to the Bill which extends BNG obligations to nationally significant infrastructure projects.The delivery of BNG will be legally secured through either (a) a conservation covenant, entered into between landowners and responsible bodies which will bind the relevant sites as local land charges, or (b) through a planning obligation (a section 106 agreement) which runs with the land.The Environment Bill outlines three possible ways to demonstrate that at least 10% BNG will be attributable to the development, through:

1. increasing the post-development biodiversity value of any onsite habitat (the land to which the relevant planning permission relates);
2. acquiring biodiversity units from any registered offsite biodiversity gain sites (such as buying biodiversity units from landowners or environmental organisations who have created those units by enhancing their own land); or
3. purchasing government-issued biodiversity credits (however, it should be emphasised that the government envisages this as a mechanism of last resort and it is believed that these credits will be significantly more expensive than option 2).

Implications and opportunities   

In practice, it will be very difficult for developers to achieve at least 10% BNG solely through their own onsite enhancement (option 1) and are thus likely to need to purchase units from landowners with registered biodiversity gain sites (option 2); ultimately impacting their available profit as a developer.Further, as to how specifically the scheme will work in practice, much of the detail remains to be laid down in secondary legislation. The secondary legislation, with its policy content aimed to be finalised in spring 2022, is expected to address matters such as how exactly the register of offsite biodiversity gain sites will work and how the BNG requirements will apply to applications for outline planning permission and reserved matter applications.Despite these limitations, BNG presents both an exciting “greener” and more sustainable approach to development, and an entrepreneurial opportunity for landowners to receive income from their land in exchange for units/credits. For example, farmers or businesses may commit to enhancing their land (such as closed landfill sites or unused farmland) so as to create offsite biodiversity units to sell to developers (ie option 2). Overall, there will be a likely significant increase in the market value of low grade agricultural land and any land capable of being enhanced.A public register will be created containing the details of any sites where a gain has been promised to be delivered and the details of to whom (i.e. developers) the units arising from that land have been allocated. This will be crucial in preventing landowners from double-selling units. In addition, a recent amendment to the Environment Bill agreed by the House of Lords means that the government must keep under review the amount of land being entered onto the biodiversity gain site register. The government must also consider whether the period for which habitat enhancement must be maintained on the biodiversity gain site could be increased, although any changes to timescale must be done “without adversely affecting" the land supply in the biodiversity gain site register.It is currently envisaged that there will be a two year transition period between the Act obtaining Royal Assent (expected 2021) and the BNG provisions coming into force in 2023. Significantly, the Environment Bill will not affect existing planning policies in relation to BNG, as at present, the National Planning Policy Framework encourages the provision of BNG where possible. Nevertheless, although local planning authorities often encourage BNG, some recently adopted local plans have now begun mandating BNG even though the legislation is not yet formally in existence.Therefore, the starting point for developers will involve checking for any requirements relating to BNG in the current (or emerging) local development plan, and then to seek to align the proposed scheme with existing guidance or standards. Even where strict BNG requirements are not prescribed by the local development plan, businesses looking to develop their sites could still plan ahead for opportunities to address BNG as early as the design stage or during site selection.

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If you have any questions in relation to this article, please do not hesitate to get in touch with Penny Simpson, Grace Stirrat, Susannah Vance or Claudia Booth.