Conservation covenants under the Environment Act 2021

A conservation covenant is a private agreement between a landowner and a designated responsible body that binds the land itself, including positive obligations, and binds it in the hands of every future owner. That is what makes it useful. English land law has never handled positive obligations well, because a positive covenant does not normally run with freehold land, and the workarounds are awkward. Part 7 of the Environment Act 2021 solved that problem for conservation purposes, which is why habitat banks now use covenants rather than elaborate contractual structures.

What a conservation covenant is and how it binds land

Four elements have to be present. The agreement must be between a landowner holding a qualifying estate and a responsible body. It must contain an obligation relating to the land that has a conservation purpose. It must be for the public good. And it must state that the parties intend to create a conservation covenant.

A qualifying estate means a freehold, or a leasehold with more than seven years remaining. Conservation purpose covers conserving the natural environment of land or the natural resources on it, and conserving land as a place of archaeological, architectural, artistic, cultural or historic interest, including its setting.

The obligations may be negative or positive. A landowner can covenant not to plough a meadow, and equally can covenant to cut and remove hay each year, to maintain a water level, or to allow monitoring access. Both kinds bind successors in title. The covenant is registered as a local land charge, so it appears on searches and no buyer can claim not to have known.

Duration defaults to indefinite where the qualifying estate is freehold, unless the agreement specifies a shorter period. Where the estate is leasehold, the covenant ends when the lease does.

Who can be a responsible body

The Secretary of State, local authorities, and bodies designated by the Secretary of State on application. Designation is not automatic. An applicant has to show that at least some of its main purposes or functions relate to conservation, and public bodies and charities can both qualify.

Defra publishes the list of designated responsible bodies, and it changes. Check it before drafting, because an agreement with a body that is not designated is not a conservation covenant at all, and the whole structure fails.

Two practical points follow. The responsible body has ongoing obligations and ongoing costs, including monitoring, so it will want those funded. And the Act makes provision for what happens if a body ceases to be designated, so the agreement should address transfer to another body rather than leaving it to the statutory default alone.

When a covenant is preferred to a section 106 agreement

The two mechanisms overlap and they are not interchangeable.

A covenant is the better instrument where there is no planning application to hang an obligation on. That is the position for a habitat bank, where a landowner is creating units to sell to developers who have not yet been identified, and it is the position for standalone conservation of a historic landscape.

A section 106 agreement is the better instrument where the obligation is tied to the development and the authority wants to enforce it directly, and where the applicant's site and the compensation land are both within the same authority.

A number of schemes use both. On-site gain secured by the section 106, off-site gain on third-party land secured by a covenant, with the biodiversity gain plan referring to each.

Securing biodiversity net gain for 30 years

The mandatory biodiversity gain condition requires habitat enhancement to be maintained for at least 30 years, and that period has to be secured legally. Conservation covenants and planning obligations are the two routes the regime recognises.

For off-site units the covenant route has become standard. The landowner covenants with a responsible body to create and manage the habitat in accordance with a habitat management and monitoring plan, the units are recorded on the biodiversity gain sites register, and a developer buys an allocation against that registration.

Three things need to line up. The covenanted land boundary, the registered gain site boundary and the plan area in the management document must match exactly. The management prescriptions in the covenant must be the same prescriptions the metric assumed when the units were calculated. And the monitoring regime must be capable of demonstrating the condition assessments the metric relies on. Where they do not line up, the Biodiversity Net Gain Assessment and the legal agreement are describing different things, and the council will notice at gain plan approval. The metric itself must be completed by a competent person.

Discharge, modification and enforcement

A covenant can be discharged or modified by agreement between the landowner and the responsible body. Beyond that, either party may apply to the Upper Tribunal, which may modify or discharge an obligation on grounds set out in the Act.

That is a higher bar than the equivalent route for planning obligations, where an application can be made to the authority after five years with a right of appeal. A covenant is meant to be durable, and a Tribunal application is neither quick nor certain.

Enforcement runs between the responsible body and whoever holds the land. Remedies include injunctions and specific performance as well as damages, and the Act limits damages against a successor in certain circumstances. For a developer buying land subject to a covenant, the diligence question covers what the obligations say and also whether they have been complied with, because an inherited breach is an inherited problem.

Effect on land value and future sale

Be honest with clients about this. A conservation covenant reduces the development value of the covenanted area, usually to close to nothing, because the obligations are designed to prevent the change of use that development would involve.

It appears as a local land charge, so it surfaces on any search. Lenders will want to see it, and a lender taking security over a farm where part of the holding is covenanted will assess the remaining land accordingly. Where the landowner is selling units from a habitat bank, the income from those sales is the offset against the value given up, and the two should be modelled together rather than separately.

Take tax advice early. The treatment of receipts from unit sales, of the land itself, and of any agricultural or business relief position is not obvious, and it has moved.

Drafting points for landowners

1. Define the covenanted land by a scaled plan with dimensions, not by a shaded extract.
2. Attach the habitat management and monitoring plan and cross-refer to it rather than restating its prescriptions.
3. Provide a review mechanism, because a 30-year prescription written today will need adjusting for climate, disease or a change in grazing availability.
4. Fund the responsible body's monitoring costs explicitly, with a mechanism that survives a change of landowner.
5. Address what happens if the responsible body ceases to be designated.
6. Deal with access rights for monitoring, and with liability for anything that happens during a monitoring visit.
7. Record the baseline condition in detail, with survey data and photographs, because everything later is measured against it.

Follow reform of this kind through the planning law timeline, and see the related note on environmental outcomes reports and the future of EIA for the other part of the 2023 reforms that changes assessment practice.

This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.