Model clause

Net Zero Land Promotion

Rory's Clause

Amendments to standard land promotion agreements and precedents aimed at balancing climate change and environmental issues against maximising financial returns for the landowner and promoter.

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Why use this?

New precedents and drafting are required to provide the options to assist landowners in creating net zero developments of the future.

The proposed amendments will mean that a landowner and their promoter/developer will have to discuss net zero and environmental implications of a development.

In effect, this creates a carbon price and accounting through a “market value” based on a different economic model, balancing financial returns and environmental impact.

A 'Zero Carbon by Design' approach is consistent with UK policy and targets on Net Zero and therefore less likely to be challenged by environmental groups.

Further, planning should be easier to achieve in and around cities or local government areas that have declared climate change emergencies.

Arguably the development will be a nicer place to live and ultimately command a comparable land price as the house sales should be stronger.

How it promotes a net zero future

The proposed clauses will ensure environmental and net zero considerations are cascaded to developers.

In effect, a commercial relationship is established to take account of natural capital consumed during construction and operation of the future development to be built on the land.

This should:

- Reduce energy consumption
- Make the transition to renewables
- Make occupation and living more affordable
- Improve air quality and wider sustainability
- Build communities for the future rather than estates of homes.

Disclaimer - please read

The clauses on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The clauses have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.

The clauses on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the clauses will achieve the relevant climate goal or any other outcome.

This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The clauses are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.

While care has been taken in the drafting of these clauses, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these clauses or any other person. Users should use their own professional judgement in the application of these clauses to any particular circumstance or jurisdiction or seek independent legal advice.

At present, all the clauses are based on the laws of England and Wales. We encourage the conversion of these precedent clauses for use in other jurisdictions.

The clause

Additional recitals:

(A) The Owner wishes any future development of the Property to create a sustainable, resilient and net zero community.

(B) The parties wish to adopt a ‘Zero Carbon by Design’ approach to the promotion, development and construction on the Property.

(C) The parties aim the Development to be consistent with all applicable policy and targets for Net Zero.

Additional Definitions 

Air Quality Index: the Daily Air Quality Index numbered 1-10 as published by DEFRA or replacement index issued by the UK government to measure air quality and pollution.

Allotment Land: land designated in the Development for use as an allotment garden and to be made available to individuals within the community

Architectural Diversity: a range of architectural designs and styles for housing and commercial buildings that provides different designs and a fair range of Affordable Housing options.

BAU Development: a development that does not [comply with UK net zero policy] [achieve EPC A standard for at least 95% of the properties] [or similar benchmark].

Biodiversity Objectives: to develop a plan for the Development that will maintain, monitor and [improve][ensure no net loss of] the genetic, species and ecological diversity on the Property in accordance with [the Natural Capital Impact Group Biodiversity Impact Metric] [the Defra Biodiversity metric] [or a similar biodiversity framework].

Carbon Capture: the mechanical or natural removal of carbon dioxide from the atmosphere

Carbon Insetting: a carbon reduction project, verified by a carbon offset standard, which occurs on the Property.

Carbon Offsetting: the purchase of a quantity of carbon credits from a project that has been verified in accordance with [insert name of voluntary standard] or from a United Nations Framework Convention on Climate Change clean development mechanism in order to compensate for the emissions made by the Development.

Climate Positive Planning Permission: a Planning Permission and Planning Agreement (if any) free from any Owner’s Unacceptable Condition (unless any Owner’s Unacceptable Condition is waived by the Owner in accordance with this agreement).

Climate Professional: an environmental or net zero consultant that specialises in the creation, implementation and measurement of net zero targets that may from time to time be appointed in accordance with this Agreement in connection with the Development.

Community Land: that part or parts of the Property designated as being for the benefit of the community, and to be held in community ownership, following the completion of the Development including:

a) Allotment Land;

b) Conservation Land;

c) Community Energy Land; and

d) Open Spaces.

Community Energy Land; land designated in the Development for the creation of renewable energy as part of a Community Energy Programme;

Community Energy Programme; the production and sale of electricity generated from the Community Energy Land whether direct to the Residents or otherwise via a community energy company.

Community Objectives: all of the following:

a) become a Plastic Free Community from the start of the Development;

b) encourage healthy living;

c) encourage use of Co-Working Space at the Development;

d) designate of areas of land for use as Community Land;

e) create structures and governance for the co-ownership and stewardship of Community Land;

f) modelled to achieve an Air Quality Index score of 3 or below at all times;

g) maximise Architectural Diversity.

Conservation Covenant a covenant to do or not do something on the land for a conservation purpose.

Conservation Land: land designated in the Development to be returned to its natural state in order to achieve the Biodiversity Objectives.

Co Working Space; a shared office space for independent workers.

Development: the buildings and wider development to be created on or at the Property pursuant to the Satisfactory Planning Permission.

District Heating Scheme; a new or existing system for the distribution of heat and hot water to buildings on the Development.

Embodied Carbon; the Greenhouse Gases that are emitted through the production and delivery of building materials for and used in the Development.

EV; a vehicle that uses one or more electric motors for propulsion and obtains all its power an electric battery.

EV Parking Spaces; spaces specifically designated for charging EVs through charge points or directly from the grid.

EV Substation Capacity; a substation with sufficient capacity to be able support the requirements of the EV Parking Spaces.

Greenhouse Gases; specified in Annex A to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC).

Green Transport Objectives; all of the following

a) to include car sharing facilities and spaces at the Development;

b) to minimise Private Car Ownership with a target of no more than [1] per 100 inhabitants in the Development;

c) to maximise EV Parking Spaces and minimise non-EV car parking spaces on the Development;

d) to maximise Pedestrian Zones;

e) to maximise cycle storage facilities;

f) to maximise cycle ways and footpaths;

g) to maximise the use of public transport for commuting by the residents of the Development; and

h) to use advanced data analytics to predict transport requirements creating new public transport hubs as required.

Hydrocarbons: principally oil, gas and coal or other fuel source derived from an organic compound made up or hydrogen and carbon.

Natural Capital: the natural assets in and around the Property including the geology, soil, air, water and all living things that the residents and community use, which make their lives possible.

NGO: a non-governmental organisation that is established to protect wildlife, the environment or biodiversity and that has rights to object to the Development.

Net Zero: the sum of Greenhouse Gas emissions from all operations on the Property and Greenhouse Gas removals, accounted for by credits from Carbon Insetting or Carbon Offsetting projects, is zero.

Net Zero Adjusted Land Price: [NUMBER]% of the Minimum Land Price or Market Value whichever is higher.

Net Zero Bonus: an additional [NUMBER]% of the Net Sale Receipts (exclusive of VAT) payable for achievement of all the Net Zero Objectives.

Net Zero Objectives: all of the following

a) maximise the proportion of Zero Carbon Housing;

b) use construction materials with the lowest Embodied Carbon reasonably available;

c) maximise self-generation of renewable energy on the Development;

d) minimise the use of heating and hot water technologies that use Hydrocarbon fuels or produce Greenhouse Gases;

e) establish a Community Energy Programme to supply renewable energy to the Development;

f) maximise Carbon Capture at the Development;

g) use Carbon Offsetting for the Development as a last resort;

h) minimise the use of energy by the Development using ‘smart grid’, demand side energy management and other technologies;

i) prioritise the use of electricity from renewable energy sources over all other types of fuel on the Development;

j) maximise the EV Substation Capacity; and

k) connect into existing District Heating Schemes where possible.

Net Zero Overage: the overage provisions set out in Schedule 1

Objectives: the Net Zero Objectives, the Green Transport Objectives, the Community Objectives and the Planning Objectives.

Open Space:

a) public open space, public recreational social or communal use amenity land, landscaped areas, play areas, school sports grounds, playing fields; and

b) parkland and woodland (including (but not limited to) any areas of land required for tree belts, structural landscaping buffer zones and noise bunds).

Owner’s Unacceptable Climate Condition: a Condition which in the Owner’s reasonable opinion:

a) will or is likely to increase the Greenhouse Gas emissions during occupation of the Development;

b) will or is likely to reduce the UK’s transition to Net Zero;

c) will or is likely to cause irreversible damage to the environment; or

d) is otherwise inconsistent with the Net Zero Objectives.

Pedestrian Zone: areas of the Development reserved for pedestrian [and cyclist] only use and where motor vehicles are prohibited.

Planning Objectives: all of the following:

a) obtaining a Climate Positive Planning Permission; and

b) maximising so far as reasonably practicable the area within the Property which has the benefit of a Climate Positive Planning Permission.

Planning Permission: detailed planning permission for the Development granted by the Determining Authority.

Plastic Free Community; has the meaning given to it by the charity Surfers Against Sewage as at the date of this agreement.

Private Car Ownership; a car, van or other vehicle owned or operated for private use.

Promoter’s Costs: [INSERT ALL THE MARKET STANDARD COSTS from a traditional land promotion agreement and add] including the fees of the Climate Professionals.

UK’s Net Zero Target: the UK Government’s target under Section 1 of the Climate Change Act 2008, which as at the date of this agreement is 2050.

Zero Carbon Housing: [has the same meaning as Level 6 of the Code for Sustainable Homes. [or any successor or equivalent standard].

Additional Clauses

  1. Development Objectives and Priorities

14.1 The Promoter shall use all reasonable endeavours to achieve all of the Objectives.

14.2 The Promoter shall prioritise the Objectives in the following order:

(a) First, the Net Zero Objectives;

(b) Second, the Green Transport Objectives; and

(c) Third, the Community Objectives.

  1. Not to promote BAU Developments

During the Promotion Period, the Promoter shall not promote through the planning process or be connected or associated in any way with a BAU Development.

  1. Green Planning Strategy

16.1 In preparing and implementing the Planning Strategy, the Master Plan and the Disposal Strategy, the Promoter shall:

(a) have regard to:

(i) the Objectives;

(ii) the priorities set out in clause 1.2;

(iii) the Embodied Carbon that will be used to build the Development;

(iv) the use of Natural Capital during the occupation of the Development in the future;

(v) the UK’s Net Zero Target; and

(vi) any policies or strategies that have been created in response to a declaration of a ‘climate change emergency’ by the local council covering the Development or the Determining Authority.

(b) In collaboration with the Climate Professionals, create a Net Zero model to measure the Greenhouse Gas emissions from the Development and demonstrate how these are reduced to Net Zero.

  1. NGO Interests

17.1 The Promoter shall engage with all relevant NGOs to encourage direct feedback from them to the extent reasonably required to achieve the Objectives or facilitate the Development, in order to reduce the number of objections at planning.

  1. Net Zero Price Adjustment

18.1 If after [ NUMBER ] months of promotion the Promoter is unable to find a buyer and the reason has been notified and evidenced as the Net Zero Objectives being too onerous, the Owner will, acting in good faith, consider offers to buy the Development Land at the Net Zero Adjusted Land Price. [DN the drafting tries to set a higher disposal threshold to enable the higher price to be used to offset the environmental losses from not hitting the Net Zero Objectives]

18.2 On sale of the Development Land at the Net Zero Adjusted Land Price the parties agree that the cash difference between the Net Zero Adjusted Land Price and the Minimum Land Price and Market Value (the “Carbon Premium”) shall be used for any of the following purposes:

(a) to progress Carbon Insetting or Carbon Offsetting relating to the Development;

(b) to promote Carbon Capture in the UK by using the Carbon Premium to plant trees or preserve peat bogs; and/or

(c) to any similar or analogous activity that would offset or balance the resulting Development’s carbon footprint.

  1. Net Zero Bonus

19.1 The Owner shall pay the Promoter the Net Zero Bonus immediately following completion of each Sale that meets the Net Zero Objectives in full.

  1. Net Zero Overage

20.1 To ensure that the Objectives are met and delivered, the Owner shall ensure the Satisfactory Planning Permission is not amended by subsequent owners or developers in a way that would erode the Net Zero Objectives.

20.2 The Owner and the Promoter agree that they will not accept a financial offer for the Development Land if such offer excludes the Net Zero Overage.

20.3 The Owner shall not exchange contracts in relation to any Sale without incorporating the Net Zero Overage either as covenant in the Transfer or as a separate overage deed.

  1. Transfer

The transfer of the Development Land to a Buyer shall include:

(a) a positive covenant to pay the Net Zero Overage [DN: assumes deed of covenant wording included elsewhere]; and

(b) a Conservation Covenant over the Conservation Land in favour of [ NGO or Community Company].

  1. Rights of third parties

Save for relevant NGOs and the potential beneficiaries of the Conservation Covenants a person who is not a party to this agreement will not have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement

Schedule 1 – Net Zero Overage

[Include ‘typical’ overage provisions and drafting.]

Add these additional definitions

1.1 Definitions:

New Owner: the new owner of the Development Land or any part of it from time to time.

Original Landowner: [Insert name of landowner from the promotion agreement]

Original Value: the consideration paid for the Development Land by the New Owner with the benefit of the Climate Positive Planning Permission.

NZ Overage Payment: an amount equivalent to [NUMBER %] of the Original Value.

New Planning Permission: an outline or detailed planning permission for the whole or part of the Development Land submitted by the New Owner, or on its behalf, which varies or replaces the Climate Positive Planning Permission such that the Development would:

(a) not meet the Net Zero Objectives; or

(b) have a higher carbon footprint than the development that would have been progressed as part of the Climate Positive Planning Permission.

Trigger Date: the date of submission to the Determining Authority of the New Planning Permission by the New Owner or its agent, developer, promoter or contractor. [DN deliberately brought forward to submission to discourage the action in the first place]

  1. Net Zero Overage Payment

2.1 On each occasion that a Trigger Date occurs a NZ Overage Payment shall immediately become due by the New Owner to the Original Landowner.

2.2 The New Owner covenants with the Original Landowner that it shall pay each NZ Overage Payment due under paragraph 2.1 to the Transferor within 10 working days of the Trigger Date.

  1. Disposals and restriction

3.1 The New Owner covenants with the Original Landowner not to make any Disposal of the Development Land without the transferee executing a Deed of Covenant.

3.2 The New Owner shall procure that the following restriction is registered on the title to the Development Land:

“No disposition of the registered estate by the proprietor of the registered estate, or by the proprietor of any registered charge, is to be registered without a written consent signed by the [Original Landowner]” [DN See notes for Users regarding Land Registry Guide 19]

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