Langley Abbey Environment Project Completes its First BNG Section 106 Agreement with LPA

The Importance of S106s

Alongside conservation covenants, S106s are one of the two legal documents which secure the delivery of BNG. They are a pre-requisite to a site becoming registered on the Biodiversity Gain Site Register, which is itself a pre-requisite to selling and allocating biodiversity units. For habitat banks such as Langley Abbey, which seek to create and enhance habitats in advance of unit sales, it is therefore essential to have a legal agreement in place to enable an immediate allocation of units following each sale.

S106s are entered into between a landowner and their local planning authority and govern how a landowner is to manage the land. The agreement itself will include covenants: legal promises by a landowner to do, and not to do, certain activities. These covenants will bind the land and are the legal mechanism by which BNG is secured for a minimum of 30 years – any future purchaser of the land will inherit the obligations and liabilities detailed in the S106.

As with any legal agreement, the key to a well drafted S106 is simplicity. Whilst it is the S106 which legally generates the biodiversity units, the detail underpinning those units will need to be contained in a standalone document, known as a Habitat Management and Monitoring Plan (HMMP). A sensible approach with any S106 concerning BNG is to keep the drafting in the agreement straightforward, and to cross-refer to the detail contained in the HMMP as far as possible. It is also wise to make efficient use of defined terms, and to adopt the relevant definitions used in the Environment Act 2021 and the subsequent regulations.

If you have a mortgage on your land, then any lender will need to be a party to the S106. This ought not to be an impediment for a landowner, so long as a well-drafted mortgagee exclusion of liability clause makes expressly clear that the lender will not be liable to comply with the obligations in the S106 unless and until it takes possession of the land (e.g. following a default by the landowner under the mortgage). That said, even with such a clause, landowners can expect lengthy delays whilst lenders approve the drafting and, most crucially, seek to get comfortable with the impact that the covenants will have on the value of their security. In most instances, this will require a professional valuation of the land – the lender will want to understand the loan-to-value ratio of the land charged, potentially excluding (or attributing zero value to) the land that will be subject to the S106. This process will inevitably take time, and the valuation costs will invariably be borne by the landowner.

Moving forward

BNG is still in its relative infancy and the offsite market is a fledgling one – at the point of publication of this article there are still only 18 sites on the Biodiversity Gain Site Register. This means that there are very few lawyers, ecologists, and planning officers who have practical experience of delivering BNG offsite, and most lenders are still trying to understand what it means for their security interests.

But whilst those numbers are currently low, Henry expects to see an increase in the coming months:

“Across the country, projects like ours have been paving the way for others to progress much more swiftly and easily. I’m sure we’ll see additional sites coming forwards with more practitioners developing a thorough understanding of the offsite market. Many LPAs will have inadvertently devised template agreements through working with existing projects, and those that haven’t yet had an offsite provider come forward within their district will no doubt be looking to their neighbours and making use of the templates out there, such as the one recently published by the Planning Advisory Service. In the meantime, I’d encourage landowners to think critically about which advisers they instruct and to engage with planning officers and lenders at the earliest opportunity. Oh, and exercise patience!”

At Langley Abbey, things certainly seem to be speeding up, with a second phase now underway with the Broads Authority. That agreement is targeted to complete in December 2024 and will see lowland meadow and ditch units become available. As with all units at Langley Abbey, these will be available to purchase directly from the project via a number of flexible arrangements. For more information, please contact henry@langleyabbeyestate.co.uk.

About our BNG Expert

Henry Parkinson
Project Lead
Langley Abbey Environment Project

Combining roles as in-house legal counsel at Langley Abbey Estate and leading Langley Abbey Environment Project., Henry is responsible for everything from stakeholder engagement through to leveraging finance through natural capital markets. He works extensively with private, public, and third-sector organisations to promote nature conservation and supports developers throughout East Anglia achieve BNG in the most cost-effective and nature-positive way. During his time in private practice, Henry advised clients on some of the earliest nutrient neutrality and local plan BNG agreements in the country.

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