November 2023 will see the majority of planning permissions subjected to a condition that development is not to begin until a biodiversity gain plan has been submitted and approved by the local planning authority. Through planning policy, the government is trying to ensure that developers leave the natural environment in a much better state than it was in before development commenced.
In the biodiversity gain plan, developers will need to show how they intend to increase biodiversity by at least 10%. They will need to do so by one or more of the following: (a) improving the habitat on the development site; (b) improving the habitat on another site owned by the developer; (c) buying units from a land manager (who in turn promises to improve the habitat on their land); or (d) as a last resort, buying statutory credits from the government who will themselves invest in habitat creation in England.
For developers, this will mean working with a consultant specialising in biodiversity net gain. Developers are likely to factor biodiversity into the design stage, to ensure that on the development site, there will be a habitat on which biodiversity can be improved. It is expected that government will set the price of statutory credits high, so developers will be incentivised to improve biodiversity onsite.
For landowners, the advent of this condition presents an opportunity to become a land manager; selling units to developers and contracting to improve the habitat on their land. Landowners will need to tie up their land for this purpose for 30 years. Whilst landowners may look favourably on this potential new income stream, amongst other matters, they should consider:
- Whether they will be able to deliver the required improvement to biodiversity and what the position is, should the newly created habitat fail?
- What happens if the developer becomes insolvent? It is likely the landowner will covenant directly with a designated responsible body or with the local planning authority to improve biodiversity on their land and as such this obligation will likely continue after the developer's insolvency. But, this may mean the landowner is out of pocket if at the point of the developer's insolvency, the developer has not paid for the units in full (perhaps because it has been agreed that periodic payments are appropriate for the relevant transaction).
- How this will affect the value of their land over the 30 year period.
- What is the position should the landowner wish to dispose of the land in the 30 year period?
- Is there a risk that the land ends up designated as a statutory site of special scientific interest, with the accompanying restrictions that will consequentially be imposed?
The proposals are a demonstration by the government of their desire to improve our environment and will provide a new opportunity for landowners and developers to work together for their mutual benefit.