All You Need to Know About Section 106 Agreements in BNG | Ask the Experts

What is a Section 106 Agreement?

A section 106 agreement (so-called because of the section of the Town and Country Planning Act 1990 that allows it) is traditionally an agreement between a developer and a local planning authority (LPA) to control a development in some way to make it acceptable in planning terms, the most usual way being for the developer to pay the LPA some money to do some specified thing such as widening a road or doing something else within its powers but not within the developer’s powers, usually outside the development site.

Until Biodiversity Net Gain came along, every s106 agreement had been associated with a grant of planning permission, but this has now changed.

What is the Role of S106 Agreements in BNG?

Biodiversity Net Gain is a new obligation on those applying for planning permission to improve ecological habitat by replacing any that is lost to the development by at least 10% more elsewhere and maintain that new habitat for at least 30 years.

There are some exceptions but not very many. The main one is that developments that reduce the biodiversity value of less than 25 square metres of habitat are exempt from this otherwise mandatory requirement, and householder and self-build developments are also exempt.

There are three options for achieving the 10% net gain, which must be secured before development can start (but this can be after the grant of planning permission):
1. Onsite – A promise to create or enhance enough habitat within the red line boundary of the planning application
2. Offsite – A promise to create or enhance habitat somewhere else, either in the developer’s ownership or in someone else’s ownership (who will generally expect payment from the developer for tying up their land for habitat creation), or
3. Credits – As a last resort, paying the government expensive statutory biodiversity credits if no suitable onsite or offsite land can be found.

A combination of the three could be pursued as appropriate. According to the ‘Biodiversity Gain Hierarchy‘ developers should look onsite first (and prioritise existing habitat enhancement rather than creating new habitat from scratch), then offsite and only then look to credits, and it is up to the local planning authority to be satisfied that this has been followed.

The onsite and offsite options are where section 106 agreements come in, as they are one of the approved ways that developers or offsite landowners can provide an acceptable level of commitment to creating and then maintaining the new habitat for the required amount of time. The offsite landowner version is the new type of agreement mentioned above, since creating habitat doesn’t usually require planning permission itself and so the agreement is not related to a planning application. Another option is what’s called a ‘conservation covenant’, which can be entered into with a ‘responsible body’, but its contents will be similar to the equivalent s106 agreement. The third option, for onsite BNG only, is to add a condition to the planning permission requiring the habitat to be provided and maintained.

How will S106 be Implemented in Ongoing Projects?

If a project will trigger the mandatory BNG obligation, then it is essential to think about BNG as early as possible in its development. If you have a choice as to where the project should be built, for example, offsetting the different habitats currently occupying the different options could make a significant difference to the cost of the project, and incentivising the minimisation of habitat loss is one of the objectives of mandatory BNG.

In our experience it is a good idea to establish communications with the local planning authority officers dealing with BNG early because their handling of this new area is taking additional time as they get used to it. For example, as a developer you can ask if they are comfortable with onsite BNG being included in a more general s106 agreement or they want it dealt with separately, and whether they have a template or precedent agreement that you should use or they want you to draft it from scratch yourself. Finding out their costs for monitoring the habitat would be a good idea as these currently vary widely between local authorities – we have seen anything from £2,000 for a whole site to £2,000 per biodiversity unit to £5,000 per year over the 30-year commitment period. There are ways to minimise such costs, if the LPA will agree, e.g. putting the onus on the developer to issue regular reports on progress on creating and maintaining the habitat.

The main ingredient of a s106 agreement for BNG is the core promise to create and then maintain the habitat for the minimum 30-year period, usually according to a ‘Habitat Management and Monitoring Plan‘ that is submitted alongside it. This will say what happens if the habitat is not progressing or is deteriorating once created in the target condition. It will also cover things like how the land will be accessed if it is not accessible from the public road network. Section 106 agreements ‘run with the land’, i.e. if the land in question is sold to someone else, they automatically inherit the obligations of the agreement.

Some LPAs have created a template agreement, and this is expected to extend to most if not all of them over time, which will speed up the process. But do check the template carefully as it will need to be tailored to your particular project and every project has unique features. If the LPA does not have a template, then there are some available online or you could draft your own but will need lawyers to do this (I can suggest one!). This will be more expensive but will reflect your particular needs specifically; even a template agreement will probably need a lawyer to tailor it to your project and ensure there aren’t any problems with it.

One of the most important things to look out for is when the agreement requires the habitat enhancement to start. Does it have an actual date specified? For offsite BNG land, is it tied to the date that the land is registered? If it is tied to the date that a developer wishing to use the units gets planning permission that might not be sufficiently certain.

Relevant Data Points 

The core to assessing BNG is using the statutory biodiversity metric correctly, which is essentially an Excel spreadsheet where you input values according to which habitats will be lost to the development and which replacement habitats will be created or improved. All land belongs to one of around 130 different habitat descriptions and each of these has a rarity score between 0 and 8 called its ‘distinctiveness’. Lower distinctiveness habitats can be replaced with any other at least as good, but as the lost habitat’s distinctiveness gets higher the rules become stricter as to what it can be replaced with (although the rules are relaxed for any enhancement beyond the 10% minimum). 

Challenges and Considerations 

Issues around the content of a s106 agreement for BNG have been covered above. One of the other challenges is that LPAs are slow at processing them, particularly if it is the first one, they have dealt with of this type, which may delay your project. 

There are actually three metrics, the main one is the area metric but there are others for hedgerows and watercourses so be careful if you are affecting them as they each need their own 10% gain. In fact, the watercourse one could bring in watercourses up to 10m away from your red line boundary because banks of watercourses are regarded as habitat rich, so be careful where you draw your application boundary. From experience, the watercourse metric is the most difficult one under which to achieve a gain, so try to avoid watercourses where possible.   

Finally, if you are a developer looking for offsite land or a landowner wanting to develop land to sell units to developers, how do you go about finding such land or such developers respectively? Unfortunately, the national biodiversity gain site register is not designed or intended to be a marketplace, and for the moment you have to carry out internet searches to find private companies that have set themselves up as marketplaces, each with slightly different business models and charging arrangements. It is to be hoped that over time this becomes more transparent. 

About our BNG Expert

Angus Walker
Partner, BDB Pitmans

Angus Walker specialises in the planning and authorisation of nationally significant infrastructure projects, mainly acting for promoters but occasionally objectors to projects, particularly using the Planning Act 2008. Angus is also an expert in the Biodiversity Net Gain space.

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