Hazel Eccles, who leads our Agricultural & Rural Land and Renewable Energy & Environment teams, considers the introduction of conservation covenants by the Environment Act 2021.
The Environment Act 2021 (EA 2021) received Royal Assent on the 9th November 2021. The purpose of this new Act is to provide governance to attain environmental targets in the priority areas of air quality, water, biodiversity, resource efficiency and waste reduction. The EA 2021 also introduces a new statutory measure of ‘conservation covenants’, as part of the Government’s 25-year plan to improve the environment.
What is a conservation covenant?
From 30 September 2022, landowners will be able to enter into a conservation covenant with a ‘responsible body’, being the Secretary of State or a designated body, that requires the landowner to carry out or abide by agreed upon set of conservation measures in respect of their land, either for a period of time or indefinitely. A conservation covenant is a private, voluntary agreement between a landowner and the responsible body, which will also be bind future owners in a similar way to Section 106 Agreements of the Town and Country Planning Act 1990 (see related articles below) also bind onward owners of land subject to that agreement.
The EA 2021 provides a new legal framework which enables landowners to commit future owners to conservation objectives. An example of the types of conservation covenants a landowner may enter into includes the prevention of the use of certain pesticides, ensuring the continuance and maintenance of an area of woodland, and the conservation of place of archaeological or other importance.
The intention is that conservation covenants are flexible, allowing parties to negotiate the terms, including the duration of a conservation covenant and if there are any upfront or ongoing payments made for such conservation, to suit their circumstances.
What are the requirements for a conservation covenant?
Part 7 of the EA 2021 requires a conservation covenant to be an agreement that:
- Relates to land. The landowner will need to have a ‘qualifying interest’, which includes either that they own the property or the let the property on a term of 7 years or more.
- Provides that the landowner must do or not do something on the land, or allows the ‘responsible body’ to do something on the land; and
- Must have a conservation purpose and be for the ‘public good’. For example, the covenant could include an obligation to maintain a woodland and allow public access to it.
Conservation covenants must be registered as a local land charge by the responsible body to be binding on future owners of the land.
The responsible body will have powers to enforce any breaches of the conservation covenant including obtaining an injunction, requiring specific performance, or payment of damages.
Is there a benefit to entering into a conservation covenant?
Whilst on the face of it entering into an onerous condition to do or not do something on your land may not sound appealing but entering into a conservation covenant may prove advantageous in a number of circumstances.
Any landowners looking to carry out any long-term conservation work on their land may want to consider entering into a conservation covenant with the relevant responsible body in return for a payment.
A prime example of the potential value of such a covenant lies in the new requirement imposed by the EA 2021 for new developments in England to provide a 10% increase in ‘biodiversity value’ – referred to as ‘biodiversity net gain’. For more information on ‘biodiversity net gain’ please see our separate article below. Land subject to a conservation covenant will clearly be attractive to developers looking for ‘off site habitats’ to meet the new requirement. This would require any conservation covenant entered into needing to apply for at least 30 years in order for it to be utilised by developers, but landowners could sell the benefit of all or part of the conservation covenant to the Developer, who would then be able to show to the planning authority that they have allocated off site biodiversity value to meet the ‘biodiversity net gain’ requirement.
Another example relates to businesses and individuals looking at ‘carbon offsetting’ or ‘carbon insetting’. Both carbon offsetting and insetting allows for businesses and individuals to offset their carbon emissions. There has been a sharp rise in enquiries to buy land for the purposes of tree planting and other high carbon sequestration uses by businesses and individuals looking to offset their carbon production. Once a landowner can enter into a conservation covenant then they can sell the benefit of its obligations to a company looking to carbon offset.
The good news with conservation covenants is that a landowner can continue to retain ownership of the land whilst selling the benefit of the conservation covenant, keeping the land within the ownership of the family for generations to come. As a final example, a landowner could enter into a conversation covenant with a charity which has been designated as a ‘responsible body’ to provide a habitat for wildlife supported by that charity in exchange for payment (or otherwise) without the need to sell the land to that charity. This would likely benefit the charity too, who may not have the means to buy the land.
Clearly careful thought will need to go into the terms of the conservation covenants, but with the continued growth in conservation and green markets, they may prove to be useful source of income for landowners whilst enhancing the natural environment for future generations.
FSP’s expertise
The Agricultural & Rural Property team has a wealth of experience in dealing with all issues relating to selling or buying land subject to or with the benefit of environmental covenants, please contact Hazel Eccles for further information on what help we can offer you.
