There has been a large gap, of around two years, between the Environment Bill being presented to Parliament and it becoming law. As a result of this many Local Planning Authorities (LPA) had already put in place planning policy requirements to secure BNG on developments. Until now we have had of limbo between the policy requirements for BNG and the delivery mechanism through the Environment Bill. Now it is an Act that has bridged that gap.
The National Planning Policy Framework already required planning decisions to provide net gains for biodiversity and requires Local Plans to pursue opportunities for securing measurable net gain through biodiversity. The local policy position has varied between LPAs mainly as a result of Local Plan reviews and adoptions at differing stages. Some LPAs have been clear in their requirement for a minimum net gain of 10% and even specific enough to refer to the DEFRA metric so it would be fair to say that, in many respects, some LPAs have policy which was ahead of the legislation. They can now fall back on the Environment Bill as further support for the policies which have been adopted or are indeed emerging within Local Plan reviews. Local Plans already including policy requiring this BNG should not, therefore, come as much of a surprise to developers who have sat up and taken it on board for the last two years or so.
BNG seeks to facilitate measurable improvements in biodiversity as a result of development. Previously a development would essentially be required to provide a strategy which would outline what the mitigation and/or compensation would be for that particular development. This did to some extent leave much down to professional opinions of ecologists and lead to room for debate and argument between relevant parties as to whether net gain was being achieved. One of the key changes now is the provision of a mechanism which specifically measures biodiversity net gain or loss via a metric.
A minimum of a 10% gain is now law and how this is going to be achieved must be set out within applications for consideration during the application process. It can be achieved in a number of ways and this is where it could potentially become interesting as developers work out what is the most cost effective, viable, way to both deliver BNG and maximise their site. Whatever options developments have it is evident that developers will not want to compromise their developable area with the most common objective being to get the maximum amount of return out of a site. Biodiversity could be retained within the development site i.e. putting areas aside for BNG within the green space, which many sites are in any case obligated to provide, but there is also the opportunity for offsite BNG.
Offsite BNG is an interesting prospect for both developers and landowners. It essentially creates a market for biodiversity units which developers can purchase and/or trade to deliver the required level of BNG to go with their proposals. This is, however, where landowners and developers need to plan ahead to secure appropriate compensation which is, ultimately, only 10%.
Most importantly they need to take appropriate advice as early as possible. The advice should be multi-disciplinary and involve all of the usual consultants who are likely to be engaged to deliver sites such as ecologists, arboriculturists, archaeologists and planning consultants. Why? The combination of this advice is going to be key to work out policy drivers and site constraints in order to work out what a site can deliver and consider viability. The latter will likely take into account therefore whether it is most cost effective to purchase credits off site to deliver BNG or, alternatively, work within the site which could work with other site constraints including, but not limited to, ancient woodland or archaeology. It may be prudent for sites to strategically be brought forward together to, for example, maximise potential on one site for over delivery of BNG which could then be traded for use on nearby sites elsewhere between developers.
From a valuation perspective (considering that viability is acknowledged as key within the National Planning Policy Framework to sites being deliverable) it is highly likely that the opportunity to create BNG credits could drive up general land values with some agents even reporting that they are actively advising some clients not to sell land just yet. It is evident some are waiting to see what value can be captured for their clients through creation of BNG credits. Despite this BNG has strong potential to impact, negatively, on development land values when considering residual valuations based on gross development value versus the cost of delivering that development. BNG will add cost to delivering development in many situations given that, depending on the site, it could reduce developable area (if delivering BNG on site) or add physical costs in the form of purchase of credits off site as well as ongoing management costs dependant on the habitat.
It is clear that Councils are working at differing speeds across the country. Some have actively adopted Local Plans which include their policy requirement for a 10% BNG and some are even actively securing sites low quality sites to improve to create BNG credits to purchase. There is an immature market, however, it is evident that the requirement for BNG could potentially create costly issues for those that have failed to plan ahead. Those that have failed to plan may be forced to find credits elsewhere and this could the difference between sites coming forward and being deliverable or not. Credits will likely vary in price depending on what it is worth to those who need it to unlock sites.
From a planning perspective it is not clear how this will impact on housing delivery going forward but there is concern that some of the provisions of the Environment Bill could well impact upon developable areas and thus restrict housing numbers coming forward. In LPAs who have not got their five-year housing land supply this could cause further issues and further debate surrounding the tilted balance in the context of the National Planning Policy Framework. It also remains to see whether LPAs have, or have access to, appropriate expertise and resources to assess the supporting BNG information submitted with applications as well as the capacity (in terms of legal teams) to secure the required BNG through the mechanisms, such as covenants and management plans, as part of developments.
The key challenges ahead within the wider planning system will be the inconsistency of approach across the country between LPAs which could reduce predictability of outcome (particularly for LPAs which are behind in terms of housing delivery and who have dated Local Plans) as well as the relationship of BNG to general development viability.
We are better connected than ever to assist you with your development projects from start to finish in terms of ecologists, arboriculturists, architects and archaeologists to maximise sites from a planning perspective and preparing and submitting applications. If you want to speak to us – get in touch via the contact page where you can book a 15-minute mini chat!