Four incoming environmental policies affecting the property sector to watch in 2022

In the first in a series of three articles, Partner and Head of Commercial Property Jo Morgan sets out four significant changes to environmental policy and explains how they will affect the property sector.

Although COP26 and the G7 Summit in Cornwall are now just a memory, climate change remains – quite literally – a hot topic. The Government has declared a climate emergency and we are now seeing a real drive towards improving and protecting our environment.

On a personal level, many of us are making changes to the way we live to protect the future of our planet. Businesses are also taking steps towards being more sustainable, with growing numbers joining the commitment to becoming Net Carbon Zero or at the very least becoming aware of their business carbon footprint and acting on it.

Several new environmental policies, many of which were derived from the Environmental Act 2021, are now in force or imminently in the pipeline. Here are four key changes to watch for in the property market:

1. The Environmental Act 2021

The Government published the Environmental Act 2021 in November. Aimed at improving and protecting the environment, it is a wide-ranging document which includes legislation that will impact across the property sector.

The Act gives the Government the ability to set a number of long-term, legally-binding environmental targets. The legislation is overarching and relates to issues ranging from waste and resource efficiency to air and water quality, nature and biodiversity and these will be key to the impact on the property market. I have given more detail below on some of the key pieces of legislation coming out of the Environmental Act.

2. New biodiversity legislation

Biodiversity has long been a buzz word in development and is currently covered under the National Planning Policy Framework. In practice, we have for some time seen biodiversity conditions appearing in planning consents for development site. The Environmental Act requirements will only increase the impact, which will need to be factored into both the practical and financial viability of sites.

Under the Environmental Act, new developments, including major infrastructure projects, will have to deliver a minimum 10% increase in biodiversity. The principle is that a development should leave the natural environment in a measurably better state after development than beforehand.

In January, Defra launched a consultation on biodiversity net gain regulations and implementation and this was open until 5 April 2022. The consultation sets out the proposals and seeks comments on how biodiversity net gain will be applied. Landowners and developers involved the property market in particular are encouraged to contribute opinions and comment on key factors and delivery.

The outcome of this consultation should give a clearer indication of what the legislation means on a practical level. Targets are due to be laid before Parliament by 31 October 2022 and mandatory requirements are expected by the winter.

Clarity on the requirements for biodiversity net gain for the sector will certainly be welcome. We also look forward to details of the provisions for the planned biodiversity credits scheme and the new national register for net gain delivery sites.

3. The introduction of conservation covenants

The Environmental Act also introduced conservation covenants. These new legal tools will allow landowners to enter into voluntary, private agreements with a “responsible body”. This could be, for example, engaging a wildlife charity to manage land for conservation purposes with the primary aim of giving a long-term environmental benefit.

The main purpose of a conservation covenant is to privately protect land by placing positive obligations on land. These covenants are binding on successors in title. This offers a greater level of certainty for investors that the environmental outcomes, whether for wildlife, water or climate change, will be secured for the long term.

These covenants are intended to be a mechanism to protect areas of natural significance and also act as a tool relating to biodiversity proposals. For example, a covenant could be used to ensure a protected area on a development site or to secure an ‘off-set’ credit agreement with bound land in a separate location.

As the legislation from the Environmental Act begins to filter through in practise, we are likely to see more of these provisions.

4. Regulations on electric vehicle charging points

New Building Regulations on electric vehicle charging points in commercial and residential buildings come into force on 15 June 2022, affecting new and change of use developments. This includes transitional regulations for developments in progress.

The regulations provide guidance on the installation and location of electric vehicles charging points in developments. There are some exclusions and exceptions. However, in many cases a new residential development will require that every new home with on-site parking is to require one charging point. New commercial buildings with more than 10 parking spaces will need at least one charge point and cable routes for one in five of the total number of parking spaces.

It is anticipated that, as an outcome of these changes, 145,000 charge points will be installed each year.

These four changes are immediately incoming and will bring more changes for the sector over the coming months and years. I would encourage anyone in the property industry to read the proposed changes and take part in consultations.

If you need legal advice on any of the issues these changes raise, we can help.

For any help or advice on these issues, please contact Jo Morgan in the Commercial Property team at Coodes Solicitors on 01726 874727 or jo.morgan@coodes.co.uk.