Biodiversity Net Gain comes into force – what does it mean for you?

Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.

It has been over two years since the concept of mandatory Biodiversity Net Gain (BNG) was introduced in the United Kingdom by the Environment Act 2021. After months of delay, the provisions are now finally coming into force (mandatory as of February 12, 2024). There is no question that the UK is in a biodiversity crisis. To address this fact, this new statutory framework aims to radically change the interplay between new development and biodiversity conservation, and will require the vast majority of new development to deliver at least a 10 percent increase in its biodiversity value. New development will, therefore, not only be nature-neutral, but will legally be required to be nature-positive – a ‘paradigm shift’ of the development process.

Below, we have set out what these provisions require, what planning applications will need to demonstrate, which legal agreements are needed and, importantly, which planning permissions the provisions apply to.

BNG is a comprehensive new statutory framework that imposes an automatic ‘biodiversity gain condition’ on every grant of planning permission. This is a pre-commencement condition and will require a biodiversity gain plan to be submitted to, and approved by, the local planning authority (LPA) before development can commence.

The biodiversity gain plan must be submitted no earlier than the day after planning permission is granted, and it will only be approved by the local authority if it demonstrates the strategy for meeting the 10 percent biodiversity gain objective. This objective is achieving a minimum 10 percent increase of post-development ‘biodiversity value’ compared to the pre-development biodiversity value of the development site for which planning permission is granted. The latest template for the biodiversity gain plan can be found here. It is not mandatory to use this template, but it is advised.

The full suite of government guidance on BNG can be found here. The BNG planning practice guidance (PPG) page is currently in draft – a final version of the PPG is awaited.

From February 12, 2024, the mandatory BNG provisions apply to all planning applications made for ‘major development’, which include:

• The provision of more than 10 dwellinghouses or, if the number of dwellings is now known, development on a site having an area of more than 0.5 hectares.
• The provision of a building or buildings where the floorspace to be created by the development is one thousand square meters or more.
• Development carried out on a site having an area of one hectare or more.
• Waste development.
• The winning and working of minerals or the use of land for mineral, working deposits.

From April 1, 2024, the requirements apply to ‘small sites’, which will use a different small sites metric to ensure the BNG calculations are more proportionate to the development. It is also expected to extend to Nationally Significant Infrastructure Projects from late November 2025. In respect of major development, it will only apply to planning applications that are submitted from February 12, 2024. If the application was submitted before this date, even if permission is granted after, it will not be subject to the requirements. It will also apply to phased permissions and section 73 permissions if the application for the ‘parent permission’ was submitted from February 12, 2024.

The provisions will not apply to:

• Section 73 permissions which are varying planning permissions granted before the BNG provisions come into force.
• Development carried out under PD (permitted development) rights.
• Householder development (including planning permission for development for an existing dwelling house, development within the curtilage of a dwelling house or any consent, agreement or approval required by planning permission in relation to such development; but not including an application for change of use or an application to change the number of dwellings in a building).
• De minimis development, being that which does not impact a priority habitat and impacts less than 25 square meters of habitat, or five meters of linear habitats such as hedgerows (a development ‘impacts’ a habitat if it decreases the biodiversity value).
• Self-build and custom-build development of nine dwellings or fewer on a site which has an area no larger than 0.5 hectares.
• Biodiversity gain sites (developments undertaken for the purpose of fulfilling the BNG condition for another development).
• High-speed rail transport network.

The biodiversity value of the site before and after will be calculated using the statutory biodiversity metric, published by Defra (Department for Environment. Food & Rural Affairs). This Excel tool will take into account the habitat type, size, distinctiveness, condition, and location to generate a ‘biodiversity unit’ value – as a proxy measure for biodiversity value.

In order to meet the ‘biodiversity objective’, and therefore discharge the ‘biodiversity gain condition’ and begin development, it must be demonstrated that a net increase of at least 10 percent biodiversity units is achieved post-development, compared to the pre-development unit.

The increase in biodiversity units can be achieved in one of three ways:

1. Onsite biodiversity gains: within the redline boundary of the development.
2. Registered offsite biodiversity gains: either on land which the developer owns but does not form part of the development redline; or through the purchase of biodiversity units from a third-party landowner.
3. Statutory biodiversity credits: as a last resort, the purchase of credits from the government.

Before the local planning authority (LPA) can approve the biodiversity gain plan, it must check that:

• Any offsite gains have been registered.
• Any offsite gains have been recorded as allocated to the development in question.
• The biodiversity value of the gains in the gain plan match the value recorded on the register.
• Proof of purchase of any statutory biodiversity credits has been provided.

The LPA must decide whether to approve the biodiversity gain plan within eight weeks and, if approved, publish the decision on their planning register.

For offsite units, a distance multiplier is applied so that its value in units may be reduced depending on how far away it is. The value does not change if the unit is in land in the same local authority area. If it is in an adjacent authority, the score is multiplied by 0.75, and if it is anywhere else in England, it is  multiplied by 0.5, to incentivize the units to be as close to the development site as possible.

Any offsite gains must be allocated to the development in order to count towards meeting the BNG objective and before the biodiversity gain plan can be approved. This can be done by completing and sending the relevant form to Natural England, along with the statutory biodiversity metric tool and payment of a small fee.

As a last resort, statutory biodiversity credits can be bought from Natural England. New guidance from Defra sets out the process, which requires the form to be completed and submitted to Natural England. You cannot use an agent or representative to act on your behalf to buy statutory biodiversity credits. Due diligence checks will be undertaken, and if you are buying as an individual, payment must be from your personal bank account. If you are buying as an organization, the payment must be from the bank account of the organization.

The process could take up to eight weeks in total – Defra will aim to respond in four weeks confirming whether you have passed the initial checks or if more checks are needed. Payment will be made once the initial checks have been passed. After payment has been made, proof of purchase will be sent, which can then be sent to the LPA as part of meeting the BNG requirements.

Defra have also published a tool which can estimate how much a statutory credit will cost. In order to make the calculation, you will need the credit type (Area, Hedgerow or Watercourse) and each credit tier (A1-A5 in area, H in Hedgerow, and W in watercourse).

Any offsite or significant onsite gains must be legally secured for 30 years. Significant onsite gains can be secured either through a legal agreement or a planning condition, whereas offsite gains can only be secured through a legal agreement. The legal agreement must require the creation or enhancement of the habitat, management of it for at least 30 years, and must provide detailed information on the planned biodiversity enhancements.

It was previously understood that the legal agreement could be either a section 106 agreement (planning obligation) with the LPA, or a conservation covenant with a ‘responsible body’. However, it was announced by the government that the only ‘responsible body’ able to enter into the conservation covenant at the time this article was published is Natural England, who had said that they will not enter into them in relation to BNG.

If onsite biodiversity units are used and are secured by way of condition, then failure to deliver the biodiversity enhancements could result in the LPA taking enforcement action. The developer will be liable, unless they have passed over the responsibility to another party for the required 30-year period.

Where units are secured through a planning obligation, either because they are offsite units or ‘significant’ onsite units where such an obligation is required to be used, then any liability for not delivering the units will be as per the terms of the agreement.

Developers cannot make a start on their development site until the biodiversity gain plan is approved, and so this process should be front-loaded as much as possible to ensure that there are no hold-ups in getting the development started, and the BNG requirements need to be considered from the earliest possible stage.

The Planning Portal website has listed the following documentation that they expect will be provided in initial planning applications, or in subsequent post-permission applications to discharge relevant conditions for permissions that are subject to mandatory BNG:

• Biodiversity statement
• Biodiversity gain plan
• Biodiversity metric calculation tool
• Baseline onsite habitat map/plan – pre-development
• Baseline onsite habitat map/plan – post-development
• Onsite irreplaceable habitat details
• Onsite habitat map/plan – post-development
• Condition assessment sheets
• Approved compensation plan (if relevant)
• Biodiversity credit details (if relevant)
• Habitat management and monitoring plan (HMMP)

If any irreplaceable habitat is found on the development (as defined in the Biodiversity Gain Requirements [Irreplaceable Habitat] Regulations 2024), then the biodiversity gain plan must show how the adverse effect of development on the onsite habitat is minimized and that ‘appropriate arrangements’ have been made to compensate for any impact. The compensation cannot include the use of biodiversity credits.

Any offsite gains, in order to count towards the objective, must be registered on the biodiversity gain site register. This will be a publicly accessible record of allocations of offsite gains linked to development. Its operator will be Natural England, which will be responsible for determining applications for offsite gains to be allocated on the register. The register opened on February 12, 2024.

Fees can be charged for applications to register the land (or to amend an entry), as well as financial penalties where false or misleading information is provided. In order to register a biodiversity gain site, the relevant form will need to be completed and submitted to Natural England along with the following information:

• Title deeds or lease agreement to prove ownership.
• Written authorization from landowner or leaseholder if applying on their behalf.
• A document or image showing the land boundary.
• A legal agreement that secures the land for 30 years (i.e., the s106 agreement with the LPA).
• Completed statutory biodiversity metric tool calculations.
• A habitat management and monitoring plan (this may be within the legal agreement).
• A local land charge search certificate.

Payment will also need to be made for the registration within 28 days of submitting the application. Defra has also confirmed that you can register a biodiversity gain site and also record allocation of offsite gains to a development at the same time – with new guidance now published.

Defra has also published Natural England’s terms and conditions as operator for the biodiversity gain site register, as well as a tool allowing the register to be searched to check details about registered biodiversity gain sites, including the location, boundary of the site, types of habitats to be enhanced or created, habitats on a site that are allocated to a development, and relevant LPA or responsible body.

The register will be populated with data supplied by applicants with their application. Once an application is accepted, the information will appear on the register. On the launch day of statutory BNG there were no registered gain sites.

The Biodiversity Gain (Town and Country Planning) (Modifications and Amendments) (England) Regulations 2024 introduced some additional requirements for phased permissions, either outline permissions or any permissions granted subject to conditions that permit or require phasing which were granted following the introduction of statutory BNG.

Those permissions will have a modified planning condition imposed on them, and instead of the submission of a single biodiversity gain plan, the development must submit:

1. An overall plan approved by the LPA before development can begin: to set up a clear, upfront framework for how the objective will be met across the whole development; and
2. A phase plan for each phase approved by the LPA, before the development of that phase can begin: to set out a phase’s contribution to the BNG objective and track progress towards the overall objective.

The mandatory requirements imposed are time consuming – developers need to ensure that BNG is factored in early to the development process, and even at the site selection and design stage, to ensure any enhancements are deliverable in such a way as to not impact on the viability of the overall scheme.

Conversations should be had with the LPA at as advanced a stage as possible, and feedback sought on the strategy proposed for achieving the biodiversity objective. It is expected that – at least in the short term – timescales for securing permission and/or discharge of the BNG planning conditions from local planning authorities will be significantly elongated, while the regime beds in and those authorities get up to speed with the requirements.

It will also take some time for a precedent or market position to be reached in respect of the content of any legal agreements, with local planning authorities currently proposing a varied range of clauses to deal with securing BNG, particularly for offsite gains where the biodiversity enhancements are being provided by a third-party landowner.

Developers should also budget accordingly, as meeting the requirements is likely to be capital-intensive. The outsourcing of liability should also be considered – there are significant legal liabilities, which can be outsourced to habitat providers or other brokers, although the structure of such outsourcing needs careful thought and management.

This is a really significant change to the whole development process and, coupled with the ongoing resourcing constraints at the local authority level, presents a number of challenges in ensuring its effectiveness.

For larger sites in particular, it should also be kept in mind that the statutory BNG provisions represent the minimum level of BNG that will be expected by the LPA. There is no prohibition on planning authorities seeking a higher level of BNG, using planning policies.

This article was written by Rebecca Roffe, Partner at CMS.

“Register a biodiversity gain site.” GOV.UK. Accessed June 6, 2024.