How will off-site net gain work for developers and landowners?

How will off-site net gain work for developers?

Where on-site enhancement is not possible, developers can either create or enhance habitat off-site or purchase biodiversity units from landowners who have created or enhanced habitats to required standards. The off-site enhancements for a particular site will be addressed in the BNG Plan and further guidance is proposed.

Developers are to be incentivised by the metric’s spatial risk multiplier to look for local sites first. Where these are insufficient, delivery beyond the local area will be possible within England. The metric’s strategic significance score will also incentivise investment in strategic areas highlighted in spatial nature strategies, such as Local Nature Recovery Strategies.

Habitat banking to allow habitat enhancement before developments occur will be encouraged. Any delay in enhancement must be reflected in the metric calculation, meaning more enhancement is required overall.

Off-site gains must be secured through conservation covenant or s106 obligation and registered before the BNG Plan is approved. The off-site habitat need not be completed before its registration or sale of units – it is proposed that off-site works are required to commence as soon as is feasible and no more than 12 months from discharge of the pre-commencement condition (i.e. approval of the BNG Plan). Delivery might be addressed as part of the off-site eligibility criteria or secured through the BNG Plan.

What does this mean for landowners offering habitat enhancement?

The consultation anticipates an annual demand for around 6,200 biodiversity units valued at around £135 million. Any landowners or managers may create or enhance habitat for the purposes of selling biodiversity units to developers. The units must meet the requirements of policy, including “additionality” and eligibility for registration. The units can be sold anywhere, provided their use is “appropriate for the development in question” (the meaning of this is unclear). However, as noted above, the distance between site and unit is accounted for in the metric, incentivising local off-site gain. Landowners will need to consider whether their proposed habitat banks will be suitable for offset for local developments, bearing in mind other likely sites and the provisions of any spatial nature strategies.

Planning authorities will be able to sell units from their own land or act as broker but cannot direct developers to purchase units from them instead of other suppliers. Authorities cannot impose a general tariff for off-site gain, not associated with specific registered sites.

Landowners will need to enter into conservation covenants or s106 obligations which will bind successors in title. Off-site gain schemes must be maintained for the minimum 30-year period required by the Act. This may be extended in the future, but the Government proposes not to do so in the first 3 years of the system. A longer period (or maintenance in perpetuity) will be encouraged, so the possibility of authorities requiring a longer period should be considered.

The Government is also considering enabling developers who can exceed statutory and local requirements for gain on a site to sell excess units as off-site gains. The relevant area of land would need to be identified in the BNG Plan and registered.

Habitat banking is being considered further, to help smooth out supply and demand and enable habitat to be established in advance. It is proposed that habitat created or enhanced from 30 January 2020 will be eligible. Investment support is being offered through the Natural Environment Investment Readiness Fund. Delivery of habitat banks may be phased, so that when units are sold to a developer, the associated parcel of land is secured by s106 obligation or conservation covenant and registered.

Monitoring is proposed, set by planning authorities under conditions and obligations (typically at years 2, 5, 10, 20 and 30). Enforcement action would be possible if there is a failure to deliver.