Green leases for commercial property and the new model clauses
If you get planning permission for the development of a site, it now comes with an obligation to ensure that there is a net gain in biodiversity. The statutory obligation is to demonstrate a minimum 10 per cent increase in biodiversity after the development has been completed, compared with the site before the development began. However, you could find yourself facing a bigger requirement as each local authority is free to impose a higher threshold.
‘Put simply, biodiversity is the variety of different plants and wildlife in a given place,’ explains Richard Price, a partner in the property team. ‘The new rules on biodiversity net gain aim to prevent loss of species and habitats and also to improve them in the long term.’
This will require new assessments of biodiversity and you will need to prepare an improvement plan as a routine part of the development process.
Most commercial property developers will need expert advice to understand the new requirements, not least because there are detailed technical definitions of types of habitat which affect the way the new rules apply. For example, there is a de minimis exemption for a development which does not impact any area designated as a ‘priority’ habitat, but it is going to be difficult for many commercial developers to decide whether this applies without an expert assessment.
Biodiversity net gain long-term requirements
Whether it is a 10 per cent or more increase in biodiversity required, you must demonstrate that it will be maintained for a period of at least 30 years.
You will have to produce a biodiversity net gain plan for your development, which must be approved by the local authority before you can lawfully start work on site. This approval could take up to eight weeks.
The formal biodiversity net gain plan cannot be submitted until planning permission has been granted, but you can submit an initial draft with your planning application to start discussions which may speed up the process. The planning authority will in any case want details about biodiversity when considering your application.
The plan must provide data on the biodiversity of the site both before and after the development, with details of how the planned gains will be achieved and secured in the long term. These calculations must be based on the detailed metric published by the government, so it is clear that you will need to engage an ecology expert alongside the rest of your professional team to carry out the assessment to comply with the rules.
Planning to meet your biodiversity obligations
The Government’s policy priority is to improve habitats on every development site, but they recognise that it may not always be possible to meet the requirements by improvements on the development site itself. To reflect this, the regime sets out a hierarchy of measures showing the order in which developers must consider how they can achieve the required biodiversity uplift:
- first priority is to improve existing on-site habitats;
- next option is the creation of new on-site habitats;
- only if it is impossible to secure the required gain on-site will developers be permitted to meet their obligations by enhancing or creating habitats somewhere else (similar to carbon off-setting); and
- as a last resort, developers may purchase statutory biodiversity credits but these will be costly.
The biodiversity net gain calculation tools are designed to ensure that any off-site habitat improvement or creation schemes are as close as possible to the relevant development site, with the number of biodiversity units required increasing the further away they are from the development.
A new market for landowners
Off-site biodiversity net gain is expected to give rise to a new market, and it could mean that developers who are able to achieve additional biodiversity in excess of the basic requirement can recoup some of their costs by selling biodiversity units. Some landowners may decide to use land specifically to provide off-site biodiversity units to developers.
Binding legal obligations
Your local authority will want to see binding legal obligations to maintain any biodiversity gain for at least 30 years. This could be in the form of a section 106 agreement, which developers and planning authorities already use to impose obligations linked to a planning permission.
There is also a new type of legal agreement, called a ‘conservation covenant’. This is a long-term binding agreement made between a landowner and a responsible body such as a local authority or a conservation charity, under which the landowner agrees to do (or not do) something on their land for a conservation purpose, for the public good.
Conservation covenants can be used for a range of purposes but the Government expects them to play a large part in securing long term biodiversity net gain. Entering into a conservation covenant will affect the way you use your land and is likely to bind anyone to whom you sell the land in the future, so it is important to get expert legal advice. There is plenty of flexibility for your solicitor to negotiate the exact terms of any conservation covenant to suit the specific circumstances of your development and they will discuss this with you.
When does this apply?
The requirements for biodiversity net gain apply to most planning applications made on or after 12 February 2024. Applications for small developments (fewer than 11 homes; buildings no larger than 1,000 square metres; and sites under 1 hectare) were exempt until 2 April 2024. If you applied for, or were granted, full or outline planning before those dates, the local authority cannot impose biodiversity net gain requirements, even if you now have to apply for approval of reserved matters.
How we can help
This is a new and complex area of law, which will affect the majority of commercial property developments. Our team of expert lawyers can help you understand your obligations and negotiate long-term agreements on your behalf. For further information, please contact Richard Price, partner in the property team on 0207 404 9400 or email richard.price@bracherrawlins.co.uk
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
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