The Nature Restoration Levy: key challenges

The introduction of the Nature Restoration Fund (“NRF”) and Nature Restoration Levy (“NRL”) under Part 3 of the Planning and Infrastructure Act 2025 marks a potentially significant shift in the relationship between planning and environmental protection. The Government introduced this system in response to concerns that environmental protections imposed through the planning system were delaying, and in some cases constraining, development. By replacing project-level assessments and site-specific mitigation with an optional (and in some cases compulsory) developer levy, the Government aims to accelerate housing and infrastructure delivery while improving nature outcomes.

But will that be the case? While the new regime promises to simplify planning decision-making and unlock housing growth, it may also create new legal, procedural, and implementation challenges, at least in the short to medium term.

Why were the changes introduced?

In 2022, 74 planning authorities paused housebuilding because of high levels of nitrates and phosphates in wetland areas near developments. Natural England’s guidance, triggered by a 2018 European Court of Justice ruling (the so-called “Dutch N Case”[1]), required that nutrient neutrality be achieved in new developments across 27 river catchments. This guidance made it difficult or impossible for local planning authorities to approve planning applications until mitigation measures were in place to show the new development would not increase nutrient burdens in affected catchments. When the nutrient neutrality rules were introduced, estimates suggested more than 100,000 homes would be affected by the end of this decade.

Over time, local authorities and private providers have developed regional mitigation schemes to provide a way forward, most of which rely on site-specific mitigation and planning agreements under section 106 of the Town and Country Planning Act 1990. However, their fragmented, site-specific nature has prevented a consistent national response, leaving many developments dependent on bespoke mitigation and contributing to substantial delays and costs.

Although attempts have been made to resolve this issue, the current regime is by far the boldest and most controversial response to date.

How will the new regime work?

The new nature restoration framework is built around Environmental Delivery Plans (EDPs), strategic and evidence-based plans prepared by Natural England to address the environmental impacts of development at a catchment or landscape scale. Rather than requiring every developer to deliver site-specific mitigation, EDPs are intended to provide a coordinated approach to improving protected habitats and species while enabling development to proceed.

Each EDP identifies the area it covers, the types of development that can rely on it, the environmental issues it addresses, the period for which it will operate and the charging framework for the Nature Restoration Levy (NRL).

Natural England is currently preparing 23 EDPs. The first, covering Norfolk, has been published for consultation[2] and aims to address nutrient pollution affecting several protected sites, while supporting the delivery of up to 15,780 homes. A further fifteen EDPs are being developed to tackle nutrient neutrality issues in protected catchments, alongside seven plans focused on Great Crested Newt impacts in areas where development pressures are particularly acute.

Before an EDP can come into force, Natural England must undertake consultation, and the Secretary of State must be satisfied that it meets the statutory "overall improvement test". In simple terms, this means that the conservation measures delivered through the EDP must, by the end of the plan period, provide environmental benefits that materially outweigh the negative effects of the development expected to rely upon it.

Once an EDP is operational, developers may choose to participate in the scheme rather than undertake project-specific mitigation. If Natural England accepts an application, it will issue a commitment certificate, and the developer will become liable to pay the Nature Restoration Levy. In most cases, participation is expected to be voluntary, although the legislation allows for mandatory payments in certain circumstances[3].

The levy is calculated in accordance with the charging framework set out in the relevant EDP and accompanying regulations. Importantly, the levy covers only the environmental impacts set out in the EDP. Any other ecological impacts may still need to be assessed and addressed through the traditional Habitats Regulations process.

A commitment certificate can be submitted with a planning application, enabling the local planning authority to determine the application on the basis that the relevant environmental impacts will be addressed through the EDP's strategic mitigation measures. Planning permission will normally be subject to a pre-commencement condition preventing development from starting until the levy has been paid, or where instalments are permitted, until the first payment has been made.

Levy receipts are paid into the Nature Restoration Fund (NRF) and must be used by Natural England to deliver the conservation measures identified in the relevant EDP. The collection, enforcement and recovery of unpaid levy charges broadly mirror the mechanisms used under the Community Infrastructure Levy (CIL) regime.

Unlocking housing delivery

From the above, the appeal is clear: rather than engaging in lengthy negotiations over habitat mitigation, nutrient neutrality, or species licensing, developers and local authorities may benefit from a more standardised process that offers greater certainty on costs and timescales and requires fewer resources. By removing the need for Habitats Regulations Assessments in relevant cases, avoiding complex and potentially costly local mitigation schemes and associated legal agreements, and allowing local planning authorities to rely on approved EDPs, the regime should, in principle, make planning permissions more predictable, straightforward, and quicker to be granted.

However, despite its appeal, will the new regime accelerate housing delivery? Strong reasons suggest implementation will take time and present significant challenges, particularly in its early years. The reasons are set out as follows.

Not every area or project will benefit immediately

A first limitation is the restricted geographical reach and scope of individual EDPs. The NRL can only be used where a development falls within an EDP's area and where the relevant environmental impact is covered by that EDP. Where either condition is not met, developers will still need to rely on traditional environmental assessments and site-specific mitigation measures. In practice, this is likely to create a hybrid system, at least in the early years, with some developments benefiting from the new regime while others continue through the conventional Habitats Regulations process. Rather than simplifying the planning system, this may add complexity and leave the overall timeframe for securing implementable planning permission largely unchanged.

Give it time

Developers, lenders and local authorities will need time to build confidence in the regime.

Although the system copies the mechanisms under which CIL is collected, it still constitutes a new regime that practitioners, developers and authorities will need time to get used to.

Equally, Natural England will have to prepare the EDPs, ensure they become operational, and learn the new processes for identifying and collecting the NRL.

In the short term, the NRF is likely to face competition from established and well-understood mitigation schemes. As with any major planning reform, developers and funders are expected to take a cautious approach, meaning many may continue to rely on familiar mitigation mechanisms until the new regime has demonstrated a successful operational track record.

Risk of litigation

Another assumption underpinning the reforms is that a more strategic approach will reduce the scope for legal challenge. However, rather than eliminating litigation risk, the new regime may simply shift it from individual planning permissions to the wider framework on which those permissions depend. Challenges could focus on the lawfulness of EDPs, the evidence underpinning them, the Secretary of State's approval decisions, levy calculations or Natural England's administration of the regime. Developers may also challenge charges they consider excessive or harmful to viability, while environmental groups may argue that the regime weakens the traditional mitigation hierarchy. Professionals and professional organisations[4] have already raised concerns about whether the EDPs will provide adequate ecological protection and whether the NRL will be sufficient to fund the conservation measures each EDP promises to deliver.

As multiple developments may rely on the same EDP, a successful challenge could have consequences far beyond a single scheme, potentially affecting housing delivery across an entire catchment or region.

Natural England may become the new bottleneck

Perhaps the greatest risk to the reforms' success is whether Natural England has the resources and capacity to fulfil its significantly expanded role. While the new regime is intended to reduce pressure on local planning authorities, it transfers responsibility to Natural England for preparing EDPs, setting levy charges, administering the scheme, securing mitigation measures, and monitoring environmental outcomes.

Concerns about Natural England's capacity are not merely theoretical. A National Audit Office report[5]  published in January 2026 highlighted resource constraints, skills shortages and wider organisational challenges that could affect its ability to deliver its growing regulatory responsibilities. If Natural England cannot prepare EDPs, process applications, and implement conservation measures at the required pace, the anticipated acceleration in housing delivery may not materialise. Instead, the reforms may simply replace one bottleneck with another.

Housing delivery delays

Finally, it is important not to overstate the extent to which environmental constraints drive slow housing delivery. Even when nutrient neutrality, Habitats Regulations, and protected species issues are resolved, developments may still be delayed by section 106 negotiations, viability disputes, objections, and planning processes. Beyond planning permission, utility and grid capacity constraints, labour shortages, rising construction costs and land assembly issues often present equally significant obstacles. Removing environmental barriers may help streamline the process, but it will not, on its own, resolve the wider structural challenges facing housing delivery.

Conclusion

The NRL represents an ambitious attempt to reconcile two objectives too often portrayed as being in conflict: protecting the environment and delivering the homes the country needs. Strategic mitigation can deliver more coherent environmental outcomes than fragmented, site-by-site measures, while giving developers and local planning authorities a simpler, more predictable route through the planning system.

However, expectations may have outpaced implementation. In the short term, the reforms' success will likely depend less on the legislation itself and more on how quickly EDPs are prepared, approved, and brought into operation. Natural England's capacity, the framework's resilience to legal challenge, the effectiveness of its governance arrangements and the timely delivery of conservation measures will all be critical.

The central irony is that a reform intended to remove delay may, at least initially, create new sources of uncertainty. Disputes over levy rates, challenges to EDPs and concerns about the adequacy of environmental protections could simply replace one set of obstacles with another. Ultimately, the success of the Nature Restoration Levy will be judged not by the ambition of the legislation, but by whether it delivers the certainty, efficiency and legal robustness needed to accelerate housing delivery without compromising environmental outcomes.

And this is where a more fundamental question arises: Even if EDPs are successfully implemented, and the NRF is fully operational, will the new regime deliver adequate environmental protection in practice? Only time will tell.

Chrisa Tsompani is a partner at Davitt Jones Bould.

^[1] Case Numbers: Joined Cases C-293/17 and C-294/17

^[2] Closing on 26 October 2026

^[3] Section 72 (5) of Planning and Infrastructure Act 2025

^[4] https://www.wildlifetrusts.org/news/planning-bill-breaks-labours-nature-promises-say-wildlife-trusts-and-rspb or https://publications.parliament.uk/pa/cm5901/cmselect/cmpubacc/1687/report.html

^[5] https://www.nao.org.uk/reports/environmental-regulation/