Supporting nature with greater biodiversity on property development sites

Healthy ecosystems are crucial for all living beings. They sustain the food we eat, the water we drink, and the air we breathe. However, many people are deeply concerned about the decline in biodiversity in the UK, largely driven by human activities, particularly infrastructure and property development. To address this, the government has introduced statutory Biodiversity Net Gain (BNG) regulations under the Town and Country Planning Act 1990. The objective of these regulations is to ensure that property development delivers at least a 10% increase in biodiversity value compared to the pre-development state of the onsite habitat.

Under the BNG regulations, property developers must improve biodiversity by 10% through one of three methods: on-site enhancements, off-site improvements, or the purchase of biodiversity credits. While this initiative aims to create more attractive and sustainable developments, the enhancements must be maintained for a minimum of 30 years. This long-term obligation exposes property professionals to new and significant liabilities.

A recent study highlights that the UK is one of the most nature-depleted countries in the world ^[1]. In response, the mandatory BNG regulations (which became effective in February last year) require all major building developments needing planning permission to deliver measurable biodiversity improvements.

Achieving Biodiversity Net Gain

Some biodiversity improvements can be achieved on-site by creating green spaces such as wildflower meadows, ponds, or nature parks. However, not all sites can accommodate the 10% gain on-site due to space or existing constraints. In such cases, developers may undertake Off-Site Improvements, which include habitat restoration or species reintroduction in areas close to the development site.

A new market has emerged to support the BNG framework. Farmers, larger estates, and landowners can dedicate land to biodiversity enhancement, selling BNG units to developers. These habitats must be actively managed for 30 years to meet the biodiversity gain targets.

Alternatively, and as a last resort, developers can buy biodiversity credits from the government - though this is a costlier option.

Implications for Developers and Property Professionals

Developers must work with ecologists to assess the site’s biodiversity value before beginning construction. Plans for achieving and managing BNG must be submitted as part of the planning application. The ongoing management, maintenance, and reporting of BNG for 30 years represent significant responsibilities and liabilities for developers, property owners, and third-party providers.

Professional Indemnity Insurance (PII) Implications

The introduction of BNG regulations brings several new risks and liabilities for construction and property professionals. These include:

• Long-Term Liability Exposure: Developers, landowners, and professionals involved in BNG planning and implementation will remain liable for maintaining and monitoring biodiversity enhancements for 30 years. This extended timeframe increases the risk of claims related to non-compliance, habitat failure, or disputes over BNG calculations.

• Due Diligence on Third-Party Providers: Developers relying on third-party providers for off-site BNG units must conduct thorough due diligence to ensure the provider’s capability to meet the 30-year management requirement. Failure in this area could result in liability claims against the developer or consultant.

• Challenges in BNG Calculation: Miscalculations or incorrect assessments of biodiversity values by ecologists or surveyors may lead to disputes or planning approval delays, exposing professionals to potential claims.

• Evolving Regulatory Landscape: Changes to BNG regulations or enforcement practices over the 30-year period could introduce unforeseen risks, requiring adaptive management and insurance coverage.

Conclusion

The BNG regulations mark a significant step forward in addressing the UK’s biodiversity crisis. While they create opportunities for ecologists, surveyors, and other professionals, they also introduce new liabilities and risks that must be carefully managed. Developers and property professionals should take proactive steps to understand their obligations and ensure they are adequately protected through robust planning, due diligence, and appropriate PII coverage.

Howden’s Construction and Property PI team specialises in the evaluation and placement of these risks into the London and Lloyds markets. We have developed strategic insurer relationships to provide our clients with the confidence to create the places and spaces we need to thrive - whether we are living, learning or at leisure.

For further advice or to discuss the PII implications for your projects, please contact the team: [email protected]