Biodiversity Net Gain is for country houses too

Statutory Biodiversity Net Gain (BNG) came into force on 12 February 2024. It has generally been portrayed either as a compliance issue for developers, or as an opportunity for landowners. It should, however, also be given due consideration in the context of buying and selling country houses and estates.

Why is BNG relevant to country houses?

There are two reasons: the first is that when estates change hands, new owners will often want to develop or redevelop parts of it. Indeed, such plans may be part of the rationale for buying in the first place. Some forms of development common to country houses and estates could potentially trigger BNG requirements, but this is unlikely to be clear-cut and will need to be assessed on a case-by-case basis. If BNG requirements are triggered by proposed redevelopment, owners will need to understand up-front what additional work (and cost) this will entail. The second reason is that using land for the creation of off-site biodiversity units, may offer a new income stream from land which has perhaps, previously, been underutilised – and has the added benefit of being an intrinsically attractive and wildlife-friendly solution.

Remind me what BNG is again?

The BNG requirement is set out in the Environment Act 2021. It provides that every grant of planning permission (with a few exceptions) is now deemed to have been granted subject to a condition that the development must deliver at least a 10 per cent increase in biodiversity value relative to the predevelopment biodiversity value of the site. This increase must be maintained for at least 30 years in accordance with an agreed Habitat Management and Monitoring Plan (HMMP) and that ongoing management commitment must be secured with a legal agreement. Although we are most commonly seeing section 106 agreements made with local authorities, conservation covenants made with “responsible bodies” are also possible. Site biodiversity values are measured using the statutory metric (effectively, a very complicated spreadsheet) into which you, with an ecologist’s help, input the size, type and condition of the current and projected habitats. The metric then attributes a number of units to each, enabling you to calculate whether there is a 10 per cent net gain. The metric should also be used as a planning tool.

Where developers cannot deliver the required 10 per cent gain on the development site itself (or on other land they own), they can buy the requisite number of units from an offsite provider or habitat bank, or, as an option of last resort, buy statutory credits.

I want to turn the stable block into offices. Is that caught?

The starting point is that BNG will apply to all planning permissions unless an exception applies. In the case of country houses, the following exceptions may be relevant:

• Development below threshold – where the proposed development impacts (ie degrades) less than 25m² of on-site habitat, or 5m of linear habitat, such as a hedge, it is exempt from BNG requirements.
• Householder exception – planning applications made by householders are exempt. Householder applications are defined as; “development for an existing dwellinghouse, or development within the curtilage of such a dwellinghouse for any purpose incidental to the enjoyment of the dwellinghouse…” it does not, however, “include an application for change of use or an application to change the number of dwellings in a building.”
• Self-build and custom build – where there are no more than nine dwellings, on a site no larger than 0.5 hectares and the project consists entirely of dwellings that are self-build or custom housebuilding (built by individuals, to be occupied as homes, by those individuals) BNG requirements will not apply.
• Small sites – this is not an exception, but where (for a residential development), there is a development with nine houses or fewer on a site of less than one hectare a simplified version of the metric and HMMP can be used.

Whether an exception applies will depend on the facts of each case. Converting a stable block to offices and a car park may fall under the development below threshold exception, but not if you are taking out 10 metres of hedgerow to do it.

Where proposed development will trigger BNG, is there other land on the estate that can be used to provide the required 10 per cent net gain? If not, the additional hassle and cost of buying units from an offsite provider must be factored in.

Using land for offsite BNG

Which leads to the second reason why BNG is relevant to country houses. In light of the decreasing returns from traditional farming, it is worth considering whether the estate has land which could profitably be used to supply and sell offsite biodiversity units to developers, who cannot achieve their 10 per cent gains on site.

For an estate considering supplying offsite BNG there are two basic options; the first is to create a specific habitat in response to a request from a specific developer. Although this is the “safer” option, it relies on forming a relationship with a developer. Alternatively, estates can create a speculative habitat bank and then sell (allocate) the units to developers at a later stage. This can be operated entirely by the estate, or using a broker, or using a company specialising in habitat banks. Inevitably, there are pros and cons with each option. Either option will need to be properly documented to ensure the statutory requirements are met.

Many buyers of country houses and rural estates will be attracted to the idea of promoting biodiversity and creating environmental goods, at the same time as securing a financial return. And you can now reassure them that land used for BNG will attract agricultural relief from inheritance tax.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, September 2024