Management Companies and Biodiversity Net Gain (BNG)

Whilst there is debate about whether onsite or offsite BNG is best as proven by our recent BNG research most future developments will incorporate onsite BNG and therefore its management will be a key consideration for developers and Local Planning Authorities (LPA) across England.

Land Trust recently surveyed 84 house builders and land promoters about the challenges of mandatory BNG. When asked how their organisation planned to manage and fund onsite BNG long term, the most popular response (43%) was to ‘transfer the land into third party management companies (Man Cos) that fund the onsite BNG via a service charge, paid for by residents’.

Passing the responsibility for long-term management of BNG to Man Cos funded by service charge, relinquishes the developers of ongoing liabilities and long-term management costs, so it is unsurprising that it will be the preferred option.

Green Infrastructure funded by service charge is becoming increasingly common on new residential developments and there are various Man Co structures with different governance, experience and safeguards, and this raises questions over capability and suitability for long-term BNG management. 42% of respondents to Land Trust’s survey, identified ‘availability of an appropriate management body’ as being a challenge to BNG suggesting the industry share the same concerns.

A structure favoured by developers is a Resident Management Company (RMC) where homeowners buy a share of the Man Co at the time of purchasing their new homes, and can volunteer to be Directors who oversee the administration of the RMC and site management.

With a high turnover of homeowners and Directors with varying degrees of relevant experience, it will be difficult to ensure a consistent or effective governance approach to management over 30 years. This raises concerns as to whether the RMC model can always ensure the delivery of the relevant Biodiversity Maintenance and Monitoring Plan (BMMP). Should the BMMP not be adhered to and the target habitat and conditions are not met, will the residents, as shareholders, then be liable for potential penalties or enforcement by the LPA? Is this fair?

Delivering BNG over 30 years is a significant responsibility and LPAs will be looking for assurances of delivery. For this reason, LPAs may require step-in rights and bond payments, should the newly-created Man Cos cease to operate and/or fail to deliver the BNG. This should be a consideration for developers and LPAs alike.

The skillset of typical Man Cos and their appointed contractors is primarily related to manicured amenity spaces, which is not comparable to what is required under a BMMP.

The biggest opportunity by far is that service charge provides a ring-fenced and ‘in perpetuity’ funding model for BNG. Should the challenge of governance be overcome, a credible and experienced property manager can facilitate the long-term delivery of BNG, going far beyond 30 years, and potentially in perpetuity.

With its extensive experience in all kinds of habitat management and the administration of service charge against over 7,000 residential properties, the Land Trust, via Land Trust Residential Services Ltd, can act as a Man Co capable of effectively delivering a BMMP funded by service charge.

We are willing to take on all responsibility relating to BNG and will manage it in partnership with residents, allowing them to play an involved role in its management with none of the associated liability, removing the reputational risk for developers.

As a regularly audited charity, we have strong governance, experience and safeguards, and a robust level of financial security offering assurances to developers and LPAs alike.

Further insight into Land Trust’s approach to BNG is summarised within our revised BNG leaflet . For more information, please contact:

Joe Heath, Environmental Lead
joeheath@thelandtrust.org.uk