Nutrient Neutrality: What developers need to know

In mid-March following advice from Natural England, a moratorium on determining planning applications for new housing was announced, impacting several local authorities across England.

Niamh Burke | Carter Jonas
26th July 2022
Water 809

Issues relating to water quality and sustainable development are currently at the forefront of the development world, placing uncertainty on the delivery of tens of thousands of homes and increasing risk for housebuilders and landowners alike. It is clear that this is now becoming a national issue, with concentrations of affected authorities in the south and south-west, the north-west, and East Anglia.

What is the issue?

The issue of water quality has arisen as a result of the additional presence of nitrates and phosphates causing imbalances in our river ecosystems. These nutrients can lead to the excessive growth of algae, affecting a wide range of habitats and in turn, can have detrimental effects. Whilst the imbalance issues have not arisen solely because of development, additional development schemes put pressure on our industrial wastewater treatment plants, which then increase the total outflow of nitrates and phosphates into our rivers.

Having previously issued advice to 32 Local Planning Authorities (LPAs), on 16 March 2022, Natural England issued advice to 42 further LPAs where Habitats Sites are in unfavourable conservation status and additional nutrient loads, such as from development, may have an adverse effect.

What implications are there for new developments?

The advice issued by Natural England will have an immediate impact on planning applications and appeals in affected areas, requiring authorities to stall housing development until they can guarantee schemes are ‘nutrient neutral’. LPAs may also need to reconsider the acceptability of current proposals in light of the advice. Developers should therefore expect significant delays in the determination of applications.

Developments in affected areas will be subject to a Habitats Regulations Assessment (HRA) and developers will be required to provide appropriate mitigation to ensure there are no adverse effects in order to meet the requirements of the Conservation of Species and Habitats Regulations 2017. Whilst the LPA should conduct the HRA, they may request a Nutrient Neutrality Statement adding a further technical element to be considered by developers.

In addition to impacts on planning applications, plan making will also be affected by the change. It is likely that there will be significant delays to the production of new planning policy whilst LPAs grapple with which sites should be included within plans.

What are the wider impacts for housebuilders and is there a solution to this ever-growing challenge?

With the issue of nutrient neutrality comes real problems and disruption for housebuilders. Whilst there are industry-wide environmental and social implications, implications for housebuilders tend to be largely financial and time-related. The volume of new homes being delivered in affected areas has already fallen and is set to fall even further unless mitigation schemes are established.

There isn’t a ‘one-size-fits-all’ solution to issues of nutrient neutrality and the approach is likely to depend on the scale of individual developments. For very small developments, the use of a package treatment plant may be a feasible option for housebuilders, however, for most developments, it is difficult to achieve nutrient neutrality by on-site measures alone.

For larger developments, off-site mitigation strategies are generally required. One option for developers is offsetting, whereby land that currently emits nitrates and phosphates (usually agricultural land) is secured, and a commitment is made to rewilding it to balance out the contamination impact caused by such a development. Where third-party land has been acquired and ‘banked’ as a nutrient sink, developers can make a contribution, secured via S106 agreement, in order to offset their development. This has been a solution provided by some of the LPAs across the Partnership for the South Hampshire region.

An alternative solution which has gained a great deal of interest amongst those affected has been provided by Hampshire and Isle of Wight Wildlife Trust, which purchased a 100-acre farm within the Solent region and then packaged it up and sold off ‘credits’ to developers. Credits were calculated using the Natural England guidance on mitigation.

Obviously, the supply of land is finite, and these solutions are land-hungry. Such solutions have been seen to increase competition amongst developers and push up both agricultural land prices and costs of mitigation. As a consequence, housebuilders will face viability issues when considering new development in affected areas.

Until mitigation schemes can be established more widely, nutrient neutrality will continue to present a significant obstacle to meeting housing needs and will pose a risk to housebuilders across the country.

Advice for housebuilders and landowners

The issue of nutrient neutrality is clearly a complex one to navigate, therefore one thing is certain: housebuilders must carry out sufficient due diligence and obtain necessary technical advice before proceeding with development transactions. Specifically, it will be essential to check whether nutrient loading is likely to be an issue and whether the site falls within one of the affected areas.

From a practical point of view, it is important to ensure that contracts and development programmes take into consideration the potential for significant delays in the planning process.

For housebuilders and landowners alike, it is advisable to undertake early engagement with Natural England to understand whether proposed mitigation measures will be considered acceptable.

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