Conservation covenants – the future of BNG?

Many however, have felt frustration with the short-term nature of the positive covenants, which do not bind successors in title, or the limitations of restrictive covenants, which generally require benefitting neighbouring land.  As such, these traditional forms of covenant do not readily facilitate long term conservation objections, often leaving those with conservational interest with little choice but to instead rely on expensive and impractical alternatives.

On 30 September 2022 however, Part 7 of the Environment Act 2021 (the "Act") came into force allowing, for the first time, for the creation of a new type of covenant; the 'conservation covenant'.

Conservation covenants are a new form of local land charge and were introduced as such on 29 November 2022.   They are voluntary, but legally binding agreements between

landowners and responsible bodies, to do or not to do something on land, for the public good with the intention of promoting conservation objective.   

A notable benefit of conservation covenants is that they can run with the land and bind future landowners as well as the person who entered into the agreement (providing a mechanism to secure long lasting conservation benefits on the land in question).  They offer flexibility as the parties negotiate the terms to suit their circumstances, including the duration of the covenant.  Conservation covenants can vary in their approach and so could contain positive or restrictive obligations, or both.  

The flexibility offered by conservation covenants provides the potential for them to be used in a wide variety of situations ranging from altruistic uses to an alternative to the purchase of land by charitable organisations and other bodies.

Whilst the potential reach of conservation covenants is clearly broader than BNG, their potential use as a tool for increasing BNG, cannot be ignored; especially as conservation covenants were introduced as part of the government's 25-year plan to improve BNG and nature recovery.

It is anticipated that in November 2023, the mandatory BNG regime is will into force under Part 6 of the Act.  This will mean that those developing land will need to provide a 10% BNG as a condition of planning permission. In this regard, it is speculated that conservation covenants will be used a mechanism to discharge this mandatory BNG condition, as an alternative to section 106 agreements.  In particular, it is envisioned that conservation covenants will be utilised where the BNG will be secured off site.

Whilst considered to be a positive tool towards ecological advancement, there remain (as with the introduction of most new legislation) uncertainties regarding the implementation of conservation covenants; The Department for Environmental Food and Rural Affairs is due to publish further guidance before the end of the year which is hoped will illuminate the remaining grey areas.  It is strongly advised therefore that those considering entering into or implementing conservation covenants are encouraged to seek legal advice. 

 The following points are examples of matters that will need to be considered on an individual basis:

• Whether a conservation covenant is the most appropriate mechanism for your project or whether an alternative solution (such as a 106 agreement) would be suitable.
• Who is the appropriate responsible body? – The ability to determine whether a body is suitable to be a responsible body lies with the Secretary of State.  The criteria upon which an organisation will have to meet is yet to be published.
• Whether the proposed parties have the resources to ensure the maintenance of the necessary works for the lifetime of the covenant.
• What obligations will need to be prescribed, who they will lie with and further, what incentives are there for those assuming them.
• The practicalities of enforcing the covenant and the potential costs in if the covenant needs to be enforced via the courts.
• The potential effect that a conservation covenant may have on the value of a landowner's property and the possible tax consequences of the this.