The biodiversity challenge for housebuilders and developers

By the end of the year, the vast majority of new development schemes will be required to provide a 10% net gain in biodiversity, which has the potential to add cost and complexity for housebuilders and developers. Developers will be required to demonstrate that they will deliver a minimum 10% net gain from the pre-development bio-diversity values of new development sites through either on-site measures, off-site delivery or by utilising an emerging BNG ‘unit’ market.

The legislative framework for imposing the 10% requirement can be found in the Environment Act 2021, however the relevant provisions will not become effective until the expiry of a ‘transitional period’ – currently expected to be November 2023. Following the expiry of the transition period BNG will be a mandatory requirement for all Local Planning Authorities (LPAs) and therefore developers.

However, some LPAs have already begun rolling out BNG delivery on certain developments in advance of the transition period.

So, what steps should housebuilders and developers be taking over the next 11 months to prepare?

Understand the Biodiversity Matrix prepared by Natural England

The Natural England Biodiversity Matrix will provide the formula for calculating existing and required levels of biodiversity and be the basis on which BNG requirements for individual developments are assessed.

Review the Biodiversity Matrix against existing ‘pipeline’ sites and/or prospective sites

This will offer some insight into what a 10% ‘net gain’ will look like on proposed development projects. Developers should also consider whether sites for which planning applications will be submitted post-November 2023 will fall within the administrative boundaries of an LPA that is already imposing BNG, and what this will mean for the proposals and viability of their developments.

Developers should also re-assess their contractual obligations to maximise value in light of the cost implications of on-site vs. off-site BNG options, with off-site options (particularly BNG ‘units’) likely to be more expensive.

Become familiar with existing LPAs literature and guidance on BNG delivery

Some LPAs are already providing guidance and examples of BNG planning conditions and S.106 obligations. Examples of these include:

Consider new design strategies to maximise on-site delivery opportunities

Developers will need to think creatively about how they can create habitats which can be incorporated into developments, for example could a public open space be converted into a BNG vehicle.

Another key feature of the BNG regime is that the gain and associated management must be in place for 30 years. Developers need to be thinking about what changes they will need to make to their estate management services if their management companies will now be required to maintain specially created ecological habitats long after sales have completed.

Review and understand the current range of ‘off-site’ delivery measures available

In terms of off-site provision, developers have the following options:

• Secure off-site BNG themselves
• Purchase non-statutory BNG units via ‘habitat banks’
• Purchase habitat credits from the national biodiversity credits scheme – although this should be regarded as a last resort
• Proceed by way of a combination of the above options

The possibility of providing off-site habitat improvements is likely to create a secondary land market in sites unsuitable for development, where developers can provide the 10% habitat enhancement needed to secure planning permissions elsewhere.

While this could present great opportunities for some landowners, for developers it is likely to add to the complexity and cost of delivering a development. However, some developers are already becoming accustomed to delivering off-site land improvements (including habitat enhancement) and so there are possible opportunities for developers to utilise existing land banks, to create excess biodiversity units as off-site gains for other developments.

To find out more about the off-site solutions available to developers read this article here

Article submitted by Ross Jarvis, Associate in the Real Estate Team at UK Law firm Michelmores

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