How to sell your BNG units

The Biodiversity Net Gain requirement (BNG) requires developers to improve the biodiversity of each habitat category on their development site by 10% above the pre-development biodiversity levels and to maintain this for at least 30 years. If developers cannot achieve the BNG through enhancing, creating, or restoring the habitat on their development site they can purchase off-site biodiversity units from land managers who will enhance, create, and restore the habitat on their land for at least 30 years. For more information on the biodiversity net gain requirement, what biodiversity units and credits are and how they work, and what developers need to achieve see our previous articles here and here. This article looks at the steps land managers/owners will need to take if they wish to generate and sell biodiversity units to developers.

 

Who can sell biodiversity units?

Biodiversity units can be sold by landowners or someone who manages the land with the landowner’s consent, e.g., a leaseholder with a lease of the land for at least the length of the legal agreement to maintain the biodiversity of the land the units are sold from. They are collectively known under the legislation as "land managers" and can include the following:

• Farmer
• Estate owner
• Habitat bank operator
• Facilities, property or estate manager
• Land agent
• Land advisor
• Planning authority using land they own
• Developer using land they own 

How land managers can sell biodiversity units

Below sets out the steps that land managers must take to sell biodiversity units on their land. 

Step 1: Calculate the number of units and habitat types that exist and could be created

Land managers should survey the following (it is advisable to consult a competent person such as an ecologist to do this):

What habitats are present on their land and what condition they are in,

How many units are currently on the land using the statutory biodiversity metric, and

How many additional habitats and units could be produced by enhancing, creating, or restoring the habitat

This will inform land managers as to how many biodiversity units they can currently sell as the land is and how many they could potentially sell after the habitats have been enhanced. Land managers should also consider which habitats they wish to create or enhance – these should be cohesive with those in the surrounding area and land managers can consult the Local Nature Recovery Strategy to assist with this and help maximise the number of units per hectare.

Land managers can either create and enhance their land to sell biodiversity units under a legal agreement with a specific development or create and enhance the habitat without a prior agreement and sell the units later on (this is known as habitat banking). Units on the same site can be allocated to different developers, however, only one unit can be allocated per development.

 

step 2: pricing units

Unit pricing will vary according to the location, project type, developer, and distance from the development site. They should be priced to cover the land manager's costs in creating, enhancing, and maintaining the habitat for at least 30 years. Factors to consider in terms of costs include insurance, expert costs, inflation, costs for the initial creation and enhancement and ongoing management of the habitat, and remedial works. Unit pricing information can be found in online marketplaces, local authorities, and land agents.

 

step 3: put a legal agreement in place

To sell units land managers must enter a legal agreement where they commit to create and/or enhance the habitat and to manage it for at least 30 years before registering the land as a gain site (more on this below). The agreement must be executed as a deed (i.e., in writing and signed by all parties).

Legal Agreements can be in the following forms:

1. Planning obligations through a section 106 agreement with the Local Planning Authority (LPA) who will be responsible for enforcing the agreement;
2. Conservation covenant agreements between the landowner and a responsible body. This gives land managers more flexibility as to who they enter the agreement with.

While the works in the agreement can be sub-contracted, only the land manager and LPA or responsible body are responsible for complying with the agreement. 

These legal agreements will need to include and establish the following information:

1. Specific details on the planned biodiversity habitat enhancements
2. Details on actions to be taken if the habitat enhancement does not go as planned
3. Who is responsible for creating, enhancing, maintaining, and monitoring the habitats
4. How enhancements will be allocated
5. Who will agree to the allocation
6. How the biodiversity gain on the site will be monitored – including access to the land to enable monitoring
7. The end date of the agreement, i.e., at least 30 years from when the habitat creation or enhancement is completed
8. Consents or licences required
9. Enforcement actions for non-compliance
10. How permitted changes will be made and disputes managed
11. Funding arrangements and payment schedules
12. The biodiversity value of the pre-enhanced habitat using the statutory biodiversity metric

A habitat management and monitoring plan, agreed with the LPA or responsible body, will also be required. This will set out the habitat management, monitoring, reporting and review procedures, and the restoration plans for at least 30 years. A template and checklist for this can be found here.

 

step 4: registering the gain site

To sell biodiversity units, the land the units are on must be registered as a biodiversity gain site on the National Biodiversity Gains register (operated by Natural England). This register lists sites helping development projects fulfil the BNG. It is important to note that no contact details will be published so this register cannot be used to connect buyers and sellers. Land managers registering land owned by a third party must prove they are entitled to do so with a signed and dated written statement from the landowner. 

Land managers can find the form to register their biodiversity gain site here and will likely need the following:

1. The title deeds or the lease agreement to prove ownership
2. Written consent from the landowner or leaseholder who has a lease of the land for at least the length of the legal agreement to maintain the biodiversity of the land the units are sold from to act on their behalf – the form for this can be found here.
3. The boundary plan of the site which must not include any personal information (e.g., the landowners name)
4. A completed statutory biodiversity metric calculation
5. A habitat management and monitoring plan
6. A legal agreement securing the land for at least 30 years
7. A local Land Charge search certificate

 

step 5: finding a buyer and selling the units

Biodiversity units are sold on a private market. Online market places enable sellers to connect with buyers. Other methods to find developers include speaking to land agents, brokers, the LPA, or habitat bank operators who may be able to connect land managers with developers.

When selling their units land managers should first seek legal advice. Issues to be dealt with in the sale contract could include the number and type of units that will be registered and allocated, the land managers’ obligation to record units, payment terms, and deposits where the developer does not want to complete the sale until their biodiversity plan is approved.

 

step 6: registering the units and linking them to the development

After the sale of the biodiversity units has been agreed the allocation of the units to the development site must be recorded on the national biodiversity gains register. This links the biodiversity units to the development site to prevent the same units being sold to different developments (known as ‘double-counting’).

 

step 7: manage the habitat for 30 years

The legal agreement must establish and detail the land manager’s obligation to maintain the units for at least 30 years after the enhancement works have been completed (these works should be started within 12 months of the units being allocated). Failure to do so can result in enforcement actions from the LPA (if there’s a section 106 agreement in place) or the responsible body (for a conservation covenant).

 

FURTHER INFORMATION

If you have any questions about any of the issues covered in this blog, please contact Daniel Clyne  in our Real Estate & Construction team or Kathaleen Anderson in our Family and Divorce team.

 

ABOUT THE AUTHORS

Daniel is a Partner in our Real Estate team. He advises clients on commercial real estate transactions with experience acting on acquisitions, disposals, asset management, pre-lets and lettings, financings and developments.

Kathaleen is a trainee solicitor at Kingsley Napley and is currently in her second seat in the Family Team. She spent her first seat in the Real Estate Team, where she assisted with commercial and residential transactions.