In the first part of this series, I suggested that Padel operators are forced to become real estate developers. Getting to grips with the planning process is probably the steepest learning curve. Depending on the site, the reports and surveys required for submission with your application are many and varied, Design and Access Statement, Planning Statement, Acoustic Survey, Highways, Drainage, Arbor, Ecology and Biodiversity Net Gain.
Biodiversity Net Gain (BNG) became a compulsory part of planning law in February 2024 by way of the Environment Act 2021. In simple terms, every development that hits the very low threshold, regardless of sector, needs to offset any deficit that the proposed development will cause on the biodiversity of the identified site, plus improve the baseline by 10%.
At this stage, it is important to note that, in my experience, most Padel operators building an outdoor centre tend to rent the land and then either fund the cap ex of the development or enter a joint venture with the site owner. These leases are normally for a 10 – 15 year period.
Why is this important? Well, because in addition to offsetting the deficit and improving the baseline by 10%, the developer must also commit to managing the offsetting for 30 years.
In the traditional real estate sectors, it is simply not financially viable for a developer to build a new building without owning the site or having a Long Leasehold interest. This is the assumption made by the Environment Act when introducing the 30 years management responsibility.
Of course, the theory of BNG is laudable, conservation is a responsibility on all of us and particularly a responsibility on developers who are negatively impacting the biodiversity of a site and surrounding area. So, as an occupational leaseholder what are your options? The Act does allow for developers to purchase BNG units off site instead of planting on the subject site. Statutory BNG units are extremely expensive but there are also a growing number of registered biodiversity net gain providers from whom you can purchase the units and who will manage for 30 years on your behalf, but these do come at a price. Depending on the classification of BNG unit, they can be prohibitively expensive.
My recommendation – understand the potential BNG impacts of your proposed development from the outset. Find an ecologist who will help you find solutions, work with them to amend or redesign your plans to mitigate deficits. Identify a registered habitat site provider in close proximity to your site and add these costs to your appraisal. They are not insignificant and they are not going away.