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Real Estate Visions 2022 – Groundbreaking development under the Environment Act 2021 – Clyde & Co

Real Estate Visions 2022 – Groundbreaking development under the Environment Act 2021 – Clyde & Co

The Environment Act 2021 makes it possible to legally implement a number of UK Government’s environmental goals. It remains to be seen if the government has placed some very difficult hurdles/solid brick barriers in front of a sector that the government claims to support, in response to the so-called green lobby.

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’.  The Act also creates an independent environmental watchdog, called the Office for Environmental Protection. 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 was passed into law in November 2021. It sets clear targets for improving air-quality, biodiversity, and water quality in the UK. 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’s enactment on its future plans. 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 gains (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 ambiguous, but very important credit scheme is still awaiting publication of regulations. Details of how the BNG requirement in practice will work are still unclear. 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?) Keep in mind the 30-year maintenance requirement at all times. 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.

Not to be forgotten is that BNG will also apply to Nationally Significant Infrastructure Projects.

Any measures that reduce the biodiversity value of a site before measuring the baseline from where the gain is to measured will be disregarded. However, it is unclear how local authorities will handle the additional workload of reviewing biodiversity submissions and monitoring their 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

Local authorities will have to deal with the new Nature Recovery Strategies. These spatial strategies will map the most valuable wildlife areas within an authority’s administrative boundary, highlighting and prioritising opportunities for improving habitats. To facilitate investment and coordination in priority areas, the goal is for the whole country to be included.

This will have a significant impact on the planning and development sector, as the maps will inform local plan making. The Strategies are intended to provide opportunities for developers to make meaningful improvements to the local environment, and encourage schemes that include the specific recovery strategies provided by the authorities.

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.

These new covenants can be voluntary but developers and local authorities will be interested in them as an alternative to planning requirements. They will enable conservation goals (such as ensuring biodiversity net gains are protected for the long-term) and offer an alternative to owners transferring land onto other legal entities to achieve these aims.

The transition

It is important that you note that the Act includes transitional provisions that mean that many of its requirements as mentioned above are still to come into effect 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.

For more information, contact Clyde & Co’s planning and environmental team.

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