The issue

Nitrogen and phosphorous are nutrients which are essential for growth of living organisms in the aquatic ecosystems. However, excessive release of these nutrients (known as eutrophication) leads to increased algae growth thereby creating pollution which in turn results in loss of natural habitat and bird species. The main contributors of water pollution have been human activity and agricultural usage. Why may you ask is this relevant to property developers?

Well, in a 2018 EU ruling known as the ‘Dutch Case’ the European Court of Justice ruled that any additional release of nutrients into protected sites (Special Areas of Conservation (SAC); Special Protection Areas (SPAs); Ramsar sites (wetlands of international importance)) which are in an ‘unfavourable’ condition would be unlawful. Following the judgement and reliance on the Habitats Regulations (which were passed to implement the EU Habitats Directive into UK law) Natural England issued guidance to certain local authorities stating that planning permissions should not be granted unless a development can achieve ‘nutrient neutrality’. In other words, the number of nitrates entering a water system needs to be offset by the removal of an equivalent number of nitrates.

Local authorities have taken a wide view of this guidance and applied it to the grant of every new planning consent including reserved matters consents where an outline consent has been secured.

It has been argued that local authorities have no power to re-open or halt the grant of planning permissions as the (secondary) legislation they rely on (Habitats Regulations) applies to new planning applications only and cannot be relied upon following UK’s exit from the EU. Furthermore, if planning consent has not been challenged through judicial review and the challenge period has expired, it becomes legally valid and cannot be challenged. However, this interpretation is yet to be tested through the Courts.

The guidance relates ‘to European sites in England and Wales and their inshore waters (within 12 nautical miles of the coast)’ and initially affected Poole Harbour, The Solent, River Avon in Hampshire, River Camel, Stodmarsh, River Wye (River Lugg component only), Somerset Levels and Moors Ramsar. However, in March 2022 a further 20 catchment areas were added to Natural England’s list bringing the total amount of affected local authorities to 74. According to Home Builder Federation, around 100,000 homes are now being delayed, not just because developers are looking for ways to mitigate the amount of nutrient that is likely to be released from their schemes but also due to the increased workload faced by the affected local authorities.

Solution

Natural England has published a nutrient budget calculator which has been further adapted by the affected local authorities. The calculator calculates the total annual nitrogen load (measured in kilogrammes) that must be mitigated by a scheme. The calculation includes assumptions and key inputs based on scientific research and assumes a default occupancy rate of 2.4 people per dwelling.  A developer would need to submit a calculation in support of their planning application and serves as a useful tool in determining whether a scheme is likely to be impacted by nutrient loading.

Solutions implemented by developers include on-site mitigations measures such as retrofitting of Sustainable Urban Drainage System (Suds), creation of treatment wetlands, package treatment plants and off-site measures, more applicable to large scale developments, such as taking land out of agricultural production by third party landowners thereby creating a credit which equates to the amount of nitrogen being produced by a site. The credit is then sold to developers to mitigate the likely nitrogen and or phosphorate output. Any agricultural land must be within the same catchment area as the proposed scheme.

It is important to note that local authorities have different processes and approaches to mitigation. For example, Portsmouth City Council has indicated that the credit system should only be used as a last resort measure and Havant Borough Council became the first local authority to create a mitigation scheme by gradually turning a site formerly used as a dairy farm into a nature reserve. A payment of £1,308 per 1kg of nitrogen contribution (increased annually) would need to be paid to the local authority along with a legal administration fee.

A pilot online auction platform was launched by the government in 2020 enabling developers to bid and purchase credits to mitigate nitrogen loading onto protected sites. If successful, this could be rolled out nationally.

Suggestions and recommendations

Until clear guidance is provided as to the correct approach in dealing with nutrient neutrality, the following should be considered by developers:

• Due diligence must be undertaken prior to acquisition of a site or during any pre planning investigations by checking whether a scheme is within the catchment area of a protected site. A site with the benefit of an outline planning consent may not be implementable unless a nutrient mitigation strategy is agreed with the local authority.
• Engage with a water quality technical specialist and an ecologist who are familiar with wastewater treatment and the effects of nutrient on environment respectively and consider the cost of implementing any proposals.
• If a development site is within a protected area, use a nitrogen budget calculator to determine any excess nitrogen that would need to be removed and liaise with a specialist to determine how best to implement any mitigation strategy.
• Find out where wastewater from the site will/drains to, particularly if the site is located on the edge of a catchment area as it is possible that the wastewater drains to water treatment works outside of the catchment area.
• Factor in potential delay and additional cost into a development programme where contracts are conditional on planning consider extending any longstop dates.
• Consider acquiring more undevelopable land from the seller (or local third party) to account for on-site mitigation.

Conclusion

The reduction in environmental pollution is on government’s green agenda and this emergence of ‘nutrient neutrality’ does not come as a surprise. Developers are having to adapt their schemes taking into consideration the likely environmental impact of their developments leading to delays and increased costs. It is thought that more and more local authorities will be added to Natural England’s list thereby affecting many more future projects. Therefore, developers should ensure they plan ahead and work with local authorities, water companies and government agencies to achieve cost-effective sustainable solutions.

For more information, please contact Huseyin Huseyin, Partner and Head of Development at huseyin.huseyin@haroldbenjamin.com or Sofia Khaliulin at Sofia.khaliulin@haroldbenjamin.com