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Biodiversity Net Gain: Costs in Monitoring your Gain

Following the passing of the Environment Act 2021 (Commencement No. 8 and Transitional Provisions) Regulations 2024 on 17 January, we now know that the mandatory Biodiversity Net Gain regime will take effect from 12 February 2024.

As the new biodiversity requirement becomes a reality, the property and development sector will be grappling with the implications of this new regime on forthcoming development projects. These implications concern not only the feasibility of meeting the 10% Biodiversity Net Gain (BNG) requirement itself, but also the extra financial costs that developers will need to shoulder in delivering schemes. There will also be an increased burden on Local Planning Authorities (LPAs), and will require long term monitoring in order to be effective.

So while the key cost commitments for developers involved in delivering or securing biodiversity gains will be obvious, a secondary consideration will be the fees charged by LPAs in order to monitor compliance with approved BNG schemes, and the extent to which these can be passed on to developers. It is common practice for LPAs to secure monitoring fees through Section 106, and indeed the draft BNG PPG envisages BNG monitoring fees to be secured in the same way. Given the statutory requirement to maintain the BNG units for a minimum of 30 years, these fees could end up being significant.

In particular, we are seeing some specific issues arise. For example, where a development’s BNG requirement is to be met through the purchase of BNG Units on a registered biodiversity gain site (especially one falling within a different authority), to what extent is it reasonable (or Reg 122 compliant) for the LPA to seek to secure long-term monitoring fees in addition to the £145 Regulation 16 fee?

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It may be that the Local Planning Authority is content to finalise arrangements for securing monitoring fees at the point of discharge of the deemed pre-commencement BNG condition. However, in the absence of an alternative mechanism, we are seeing that LPAs are requiring a simple Section 106 Agreement/Unilateral Undertaking to secure and document the payment of monitoring fees.

This is often in addition to any Section 106 Agreement required to be entered into in order to secure the granting of the planning permission itself, which are likely to have been negotiated at great length and cost. The idea of entering into another Agreement at some stage in the future (and bearing not only their own costs in doing so but also the costs of the Local Planning Authority and any other landowner/chargee) may be wholly unappealing to developers. In this instance, should developers be pushing to include monitoring fee provisions within the main Section 106 Agreement? In some situations this will be possible, however, given that the Biodiversity Gain Plan will not be formally submitted until post-grant of permission there are likely to be many situations whereby the sum due is simply unknown at the time of entering into the Section 106 Agreement.

Perhaps the most straightforward answer would be for some sort of streamlined ability to pay these fees outside of the normal Section 106 process at the point of condition discharge. However, unless and until this is expressly provided for in legislation, it is difficult at this stage to envisage what this may look like. For now, developers will simply have to do the best they can with the mechanisms and tools at their disposal.

For more information about this matter please get in touch with Matthew Hills, in our Real Estate team.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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