26 May 2023
There’s been a flurry of recent activity from the Government in relation to the forthcoming mandatory Biodiversity Net Gain (BNG) requirement in England. In February they released their long-awaited response to the consultation on regulations and implementation, alongside some new guidance. In March, Natural England published the Biodiversity Metric 4.0 which includes a small sites metric.
One thing that is clear is Government still intends for the mandatory requirement to come into force for all major applications submitted in England this November, although secondary legislation is required to enact this.
What do we know?
The guidance and consultation response have provided clarity on some of the outstanding issues and has filled in some of the detail that was missing.
Key things we now know are:
Timescales: applications submitted from November this year for major development (in England) will be subject to the mandatory BNG condition, for ‘small sites’ (i.e. non-major development) this will be imposed on applications submitted from April 2024 and for NSIPs ‘no later than April 2025’;
Exemptions: development impacting habitats below a set threshold, householder applications and BNG sites will be exempt, whilst previously developed land, Change of Use and temporary won’t be exempt;
Section 73 applications: These will only be subject to the mandatory BNG requirement where the original permission was granted after BNG became a mandatory requirement;
Outline and phased permissions: the approach to delivery of BNG from the whole development on a phase-by-phase will be required up front but LPAs will have some discretion how and when delivery is achieved. There will be a requirement for approval of a biodiversity gain plan prior to commencement of each phase;
Mechanics: Biodiversity gains will be secured through a combination of planning conditions, planning obligations or conservation covenants and enforced primarily by the planning enforcement regime;
Biodiversity units: it is anticipated that a biodiversity unit market will develop, whereby any landowners will be able to sell biodiversity units (subject to meeting the relevant requirements) - see Government guidance for more information. If a development delivers a BNG of more than 10%, the excess units can be sold on the market;
Biodiversity Gain Site Register: this will be operated by Natural England and will record all off-site gains. Registration of off-site units will be mandatory, and will require a binding legal agreement with Habitat Management and Monitoring Plan (HMMP) to qualify. We are yet to see the register, however it is expected to be up and running by November;
Government credits: these will be sold by Natural England, the price will be set intentionally high to discourage their use, and they will be phased out once the biodiversity unit market has matured. The initial price will be published in May 2023;
Stacking: you can sell biodiversity units and nutrient credits from the same parcel of land relying on the same enhancements, however there are restriction on combining sale of biodiversity unit with other land management schemes. See guidance for info.
What don’t we know?
Whilst the recent guidance and response to the consultation is helpful and provides some much needed clarity, there is still a way to go to get the system up and running smoothly by November. In the consultation response there is acknowledgement that secondary legislation and further guidance is required in relation to a range of topics, and that the Government are working to resolve some issues raised. The key outstanding items are:
Biodiversity information: A Biodiversity Gain Statement must be submitted with the planning application, and a Biodiversity Gain Plan must be approved to discharge the BNG condition, however, we still haven’t seen templates for these documents. We are also still waiting on a HMMP template (which will be required for registration of off-site gains);
Outline and phased permissions: Secondary legislation and guidance is required to clarify and formalise processes for applying the BNG requirement;
Off-Site Gains: further guidance is required to clarify what constitutes “appropriate off-site biodiversity gains for a particular development”. The price of registering off-site gains is yet to be determined – a range of £100 to £1,000 is given. Secondary legislation is required in relation to processes for making and determining applications to the register;
On-Site Gains: there are uncertainties around timescales for provision and what threshold would trigger a requirement for a formal mechanism to secure gains
Exemptions: Secondary legislation is required to implement exemptions, including for impacts on ‘irreplaceable habitats’. Further consideration is being given to how to exempt ‘small scale self build plots’, whilst avoiding unintended consequences;
The long term: biodiversity gains must be maintained for at least 30 years, but what happens after that? The consultation response is clear that the intention is for the vast majority of gain sites to remain in some sort of “conservation management”, and suggests that landowners should take this into account. The mechanics of how this may be controlled are yet to be determined.
Will the new system work?
BNG is already being applied across large parts of the country at varying percentages so we know that a system can work. But will the system due to come into force on permissions for major development submitted from England in November work or is it over-designed and overly prescriptive? The key to its smooth running will be an early launch of the Biodiversity Gain Site Register, which is specified in the Environment Act as being necessary for the use of off-site biodiversity gains.
Get it touch if you’d like to discuss how to navigate your way through the BNG system
As we wait for the Government to publish its response to the recent NPPF consultation, and issue a revised version of the Framework, the issue of housing need is being debated more widely than ever by politicians, planners and those involved in the industry. But aside from the question of how many new homes we need and where they should go, there is another central issue at the heart of any discussion regarding the delivery of new housing: viability.
At its most basic level, viability relates to the relative balance between the value generated by a development and the costs associated with its delivery. If a scheme is not viable then, generally speaking, it is unlikely to come forward. The issue of development viability has long been an important consideration in the planning system with the focus tending to have been on whether specific policy requirements (for example, relating to affordable housing provision of Section 106 contributions) can be sustained. Planning policy in England and Wales now seeks to front-load all consideration of development viability so that it is given a much greater emphasis at strategic plan preparation stage. By placing viability at the heart of the plan-making process, the assumption is that developments that accord with the strategic plan will be viable. It would be for an applicant to demonstrate why the viability of their development is compromised because of changes in circumstances since the plan was prepared and adopted.
At a time of continued very high inflation – with the cost of building materials rising at a particularly alarming rate – house prices stagnating or even falling in many places, and policy expectations increasing, the viability challenge has never been so acute. Coupled with the deepening housing crisis, the need to get any consideration of viability right is greater than ever.
In considering viability, planning policy advocates the use of standardised inputs. This was considered in detail by Dove J in the case of R (Holborn Studios) v London Borough of Hackney (2020). Paragraph 63 of that judgment noted that the PPG “makes clear the preparation of a viability assessment ‘is not usually specific to that developer and thereby need not contain commercially sensitive data’.” In the absence of any guidance on the inputs that should be applied, Lichfields’ Fine Margins research provides clarity on the issue.
The combination of viability being front loaded into the plan-making process and the standardisation of inputs has necessitated a change in approach. As a pre-eminent planning and development consultancy, which understands the relationship between planning policy and viability and have extensive experience in assisting clients through the plan making process, Lichfields is uniquely placed to help.
How can Viability help?
Our new viability tool is designed to help clients navigate the local plan/CIL process by supporting the promotion of sites, assessing evidence prepared to inform strategic plans, and informing our presentation of evidence to local plan and CIL examination. A summary of the key stages of viability input is summarised below:
VIEW VIABILITY FRAMEWORK
The tool can be applied in a flexible way and shaped to reflect the increasing level of detail that is required as a strategic plan moves through the various stages of consultation towards submission, examination and adoption. This might include a high-level overview of viability issues to inform candidate site submissions, with additional detail provided as plans for the site and the local authority’s policy aspirations become clearer.
In addition, recognising the need for strategic plans to be flexible in responding to changing circumstances, our Viability tool can also be applied at planning application stage and inform the case for the renegotiation of viability where necessary.
The ongoing – and deepening – housing crisis can be overcome. To do so, it will be necessary to bring an adequate supply of high-quality homes, of the right types and tenures, and in the right places. Ensuring that those developments are viable will be essential to their delivery. Viability now lies at the heart of the planning process and needs to be given due regard from the earliest stages of site promotion. Lichfields has the experience and expertise to navigate this area of the system and provide a robust, evidence-led case for development at each phase of the planning process. In so doing, we can assist in ensuring that local plans include deliverable housing allocations and that viable new housing sites come forward in way that balance the needs of all stakeholders whilst also providing high quality new spaces for people to live.
Please get in touch if you would like to discuss how we might help you.