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Real Estate Visions 2022 – Groundbreaking development under the Environment Act 2020

Real Estate Visions 2022 – Groundbreaking development under the Environment Act 2020

The Environment Act 2021 brings into law – theoretically at least – a number of the UK Government’s environmental aspirations. It remains to be seen, however, whether in responding to the pressures of the so-called ‘green lobby’, the government has effectively placed some rather difficult hurdles/solid brick walls in front of a development sector which, at the same time, the government is ostensibly claiming to support.

The Environment Act 2021 (the Act) introduces a number of environmental measures including Nature Recovery Strategies, conservation covenants and the concept of ‘biodiversity net gain’. It also creates the Office for Environmental Protection, an independent environmental watchdog. Whilst on one level the Act will certainly assist in protecting the natural environment – the question, unanswered at present, is whether in so doing, it will create obstacles (in some cases possibly unjustifiable obstacles) to that very regeneration that the UK economy so clearly needs.

The Environment Bill, which was passed in November 2021, set clear targets for improving the UK’s air-quality and biodiversity. Headlines at the time focused on these targets and the establishment of the Office for Environmental Protection (which will amongst other things “review and report on government’s progress in meeting environmental goals and targets”), championing the Act as a world leading and ambitious example of environmental legislation which coincided with the COP26 Climate Summit.

After the Act has been enacted, the property industry must now consider the effects of the Act on future schemes. A great deal of the Act has yet to come into force – dependent on the making of secondary legislation by regulation to provide much needed detail to the somewhat unhelpfully generalised wording employed in the Act itself.

So how does this ‘ground-breaking’ act aim to affect an industry looking to do exactly that?

Biodiversity net Gain (BNG).

The Act amends 1990 Town and Country Planning ActSo, any applicant for permission to develop a property must show that it will achieve a 10% BNG. If it is not possible to achieve the net gain on the application site itself, it will be open for the applicant to propose the improvement of the biodiversity of an alternative area of land and if that is not possible, provided the relevant system has been put in place, purchase what will be known as ‘bio-diversity credits’. A register of these ‘net gain sites’ will be created, whilst the local authority or designated body will ensure that the gain itself is in place for 30 years.

The Act’s somewhat obscure (but crucial) credit scheme is still awaiting publication of regulations. Details about how the BNG requirement will actually work in practice are also unclear until then. What is certain, however, is that when the provisions are brought into effect, they are bound to impact on scheme viability in terms of cost and raise questions as to timing (should the BNG be delivered on completion of the development – on first occupation – or in time, when it matures?) Always keep in mind the 30 year maintenance requirement. While these provisions are not due to become effective before 2023, many planning authorities have already required developers to provide 10% BNG. This complicates and possibly delays the application negotiation process.

Be aware that the BNG concept will be equally applicable to Nationally Significant Infrastructure Projects.

Any measures to reduce biodiversity value of a location before measuring the baseline to which the gain is to occur will be disregarded. It is not clear how local authorities will manage the additional workload of reviewing biodiversity submissions, and monitoring implementation. Although the government has not yet provided additional funding, it is possible that planning authorities may be able to charge developers for the use of council-owned land as off-site gain areas.

Nature Recovery Strategies

The creation of new Nature Recovery Strategies will add another burden to local authorities. These spatial strategies will map the most valuable wildlife areas within an authority’s administrative boundary, highlighting and prioritising opportunities for improving habitats. The goal is to include the entire country in order to facilitate coordinated investment in priority areas and to facilitate coordination of action.

These maps will also have an impact on the planning and development sector, as they will inform local plan making. The Strategies will provide developers with opportunities to make positive changes to the local environment and encourage schemes that include specific recovery strategies.

See Also

Conservation covenants

The Act also introduces the concept of ‘conservation covenants’, effectively voluntary legal agreements which will bind and run with the land. These covenants might include positive obligations such as maintaining habitats on site or negative obligations preventing certain actions and will restrict owners’ use of their land potentially indefinitely, with the threat of injunction or a claim in damages if breached.

Although these new covenants will not be binding, developers and local authorities may be interested in their potential to replace planning obligations. They will be able to achieve conservation aims, such as ensuring biodiversity net gains for the long term, and will provide an alternative to owners transferring their land to other legal entities in order to secure those aims.

The transition

It is important to remember that the Act contains transitional clauses that means that many of its requirements, such as those mentioned above, will still be brought into force by regulation.

With increasing public awareness and the National Planning Policy Framework (and increasing numbers of local plans) requiring an element in biodiversity net gain, developers can’t afford to ignore nature conservation issues. In sum, the Act when fully in effect, will create a radical shift in the approach to development – both urban and rural.

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