Improving habitats and restoring our natural world is critical if we are to avoid the worst effect of man-made climate change; accordingly, the Government's 25 Year Environment Plan targets improvements for nature and biodiversity, and the Environment Act 2021 (the Act) imposes a requirement for compulsory biodiversity gains for all developments (see our earlier article on 'the case for biodiversity').
One of the key mechanisms for securing Biodiversity Net Gain will be conservation covenants, a new legal tool in England, although considered by the Law Commission eight years ago. Conservation covenants may be a new concept for some developers, they will rapidly become familiar when they come into force from 30 September 2022.
We set out below ten things you need to know about the new conservation covenant regime:
1. What is a conservation covenant?
A conservation covenant is an agreement between a landowner and a responsible body containing provisions of "a qualifying kind" that has a conservation purpose and is intended to be for the public good.
A provision of a "qualifying kind" means that it must either require a landowner to do, or refrain from doing, something on their land; or require a responsible body to do something on that land.
The requirement for a conservation purpose will be satisfied if the purpose of the covenant is to conserve, protect, restore or enhance:
- the natural environment of land or the natural resources of land;
- land as a place of archaeological, architectural, artistic, cultural, or historic interest; or
- the setting of land with a natural environment or natural resources or which is a place of archaeological, architectural, artistic, cultural, or historic interest.
It is clear that conservation covenants will have a far broader use than for just securing biodiversity net gain, for example they may find a place in conserving heritage assets.
2. How will conservation covenants feature in the development context?
In future, every planning permission will be deemed to include a condition requiring a biodiversity gain plan to be submitted to, and approved by, the local planning authority before development is commenced.
The Act inserts a new Schedule 7A into the Town and Country Planning Act 1990. Schedule 7A broadly requires that biodiversity improvements can only be taken into account by a planning authority (when considering the biodiversity gain plan), where the maintenance of that habitat enhancement is secured for 30 years by a planning obligation or a conservation covenant.
While maintenance of new habitat or biodiversity measures may be the principal focus of conservation covenants, it is likely that they will also deal with establishment of the habitat and, where relevant, public access.
3. Who is a responsible body?
The Act provides that the Secretary of State, and those bodies designated by them, will be "responsible bodies" capable of entering into conservation covenants with landowners and enforcing landowners' obligations.
Local authorities may be designated provided that the Secretary of State considers they are "suitable" to be a responsible body (which will surely be the case in all but the rarest of occasions); but of greater interest is that other parties may be so designated if their purposes, functions or activities relate to conservation - further criteria may be provided in future. We may well see expert bodies (wildlife trusts, charities, etc) seeking to become responsible bodies; especially where they have expertise, whether in the locality or in the management of that type of habitat.
4. What will the obligations look like?
A conservation covenant may contain positive, or negative obligations, or both. They may be given by the landowner, or indeed the responsible body.
A positive obligation might require certain specified management and maintenance actions to be undertaken for a specified time (in return for a fee where given by a responsible body), to allow public access on certain terms. Negative obligations may, for example, prevent the use of pesticides or herbicides, or indeed the use of fertilisers, or the cutting of a meadow.
In a biodiversity net gain context, the covenants will need to be for 30 years but the Act provides a default position whereby covenants will be indefinite for freeholders, or in the case of leasehold interests, the remainder of the leasehold term.
5. Who will be bound by the covenant?
Conservation covenants given by landowners are owed to the responsible body, and vice versa.
Landowner conservation covenants will bind successors in title; whether future owners of the relevant land, or those whose interest is subsequently created, such as leaseholders. Covenants given by responsible bodies will be owed to landowners and their successors.
6. What does enforcement look like?
The Act allows for four remedies for those seeking to enforce the obligations within the conservation covenant:
- Specific performance
- An order for payment of an amount due under the covenant.
In considering whether to grant an order requiring specific performance and an injunction, the Act makes clear that the court must take into account the public interest. Where a landowner breaches the obligations, the court is able to award exemplary damages to ensure that the landowner does not financially benefit from its breach.
7. Are there any defences to enforcement action?
Yes, the Act sets out a number of defences to enforcement proceedings and these depend upon:
- if the breach occurred for reasons beyond the defendant's control;
- if the breach arose in the course of an emergency in circumstances where steps were taken to prevent loss of life or injury to any person;
- at the time of the breach, the relevant land was designated for a public purpose and compliance with the obligation within the conservation covenant would have involved a breach of any statutory control; and
- statutory authority.
We expect that in the vast majority of cases, breaches will be dealt with outside the court system, although responsible bodies will not necessarily be as predictable as more usual regulatory bodies. It might well be the case that the Secretary of State provides guidance on this issue in future.
8. Variations and modifications
The Act contains provisions enabling modification of conservation covenants with the agreement of the responsible body; and applications to the Upper Tribunal can be made to discharge or modify obligations.
Given the importance of the conservation covenant to the biodiversity net gain regime, it may well be that the approval of the local planning authority to modifications and/or discharge of obligations will also be required. Indeed, without such a provision, it may be difficult to obtain the approval of the local planning authority to the biodiversity gain plan.
9. Are there any other requirements?
The Act sets out relatively few formalities for conservation covenants, however, the agreements must be executed as deeds, and it must make clear that the parties intend to create a conservation covenant.
There are no requirements for plans to be appended to the covenants, although clearly those will be critical to identify the relevant land.
10. What will the conservation covenant look like?
There is no prescribed form of conservation covenant, and while the Act envisages bi-partite agreements between landowners and responsible bodies, in the context of biodiversity net gain they will need to be approved by the local planning authority as part of the biodiversity gain plan. As such, we may find local planning authorities either imposing a standard form, or requiring certain matters to be included.
We expect conservation covenants to contain:
- Introduction or recitals, setting out the statutory purposes of the agreement, identifying the land and aims of the agreement.
- Term - making clear that the covenant applies for 30 years.
- Various boilerplate provisions, such as notifications of sale, jurisdiction, no partnership etc.
- Enforcement protocols - given the importance of the biodiversity gains and habitat creation and improvement, there will need to be a balance between swift remediation of breaches and formal enforcement action. In the absence of guidance from Government, conservation covenants may introduce an enforcement protocol setting out how alleged breaches will be managed on a practical level.
- Provisions dealing with modification of obligations. Over a t30-year lifetime, it is likely that conservation covenants will need to be revisited to ensure that they are fit for purpose. A robust conservation covenant is likely to require the approval of the local planning authority before material modifications are made, or at least require a degree of consultation.
- Costs - a responsible authority is under no obligation to enter into a conservation covenant, and will need its costs to be met. Over a 30-year period, there will need to cost increases.
- Responsible bodies may need to be replaced, if for example they repeatedly breach their obligations, or if they cease to exist. We expect local planning authorities will want to be involved in the selection of replacements, and may indeed have preferred providers.
- Reporting - given that the Biodiversity Gain Plan will likely require reporting to the local planning authority - and indeed the landowner/developer will likely have its own climate disclosure obligations to meet - the Conservation Covenant will need to ensure a regular flow of consistent data between landowner and the responsible body.
- The bulk of the conservation covenants will contain a mix of positive and negative obligations on landowners and responsible bodies, as appropriate. For example obligations dealing with:
- Public access and the terms on which access is permitted.
- Compliance with management schedules.
- The prevention of non-native invasive species.
- The removal of waste and litter.
- Maintenance of structures and paths.
- Preventing signs and advertisements.
- Preventing development within the land.
- Access to the land for livestock.
- Requiring security and preventing trespass.
- Requiring remediation/restoration where damage occurs.
To discuss any of the points raised here about the new conservation covenant regime or any issues arising for your business in relation to the Environment Act 2021, please contact Ben Stansfield.