Plan damage under the Environment Act: Normal social risk and transitional law

In many areas, the Environment Act is "policy neutral," meaning that the applicable standards remain materially the same as current law. With regard to planning damage, however, the Environment Act leads to major changes. For example, the Environment Act means that planning damage can be claimed from a different point in time. In case of indirect planning damage, the actual situation prior to the moment of assessment will be taken into account and a fixed percentage for the normal social risk will be included in the law. These changes can have major (financial) consequences for real estate developments.

Environment Act entry into force

In the run-up to the entry into force of the Environment Act, we have written several articles on partial aspects of that Act. For example, we have informed you about fees under the Environment Act, flexibility and procedures under the Environment Act, the Decree on Building Projects in the Living Environment, the technical construction activity, coordination under the Environment Act, the changed system for an application for a test against the environment plan, steering options, transitional law and we have explained the difference between a zoning plan and an environment plan.

The Environment Act significantly changes the regulation of planning damage. In the first part I discussed the new regulation on the decision causing damage. In the second part I discuss the new comparative methodology and this third part I discuss the changes for normal social risk and transitional law.
[campaigns]

Normal social risk

Based on current regulations, when indirect damage[1] occurs, part of the damage remains for one's own account. This is the normal social risk. Based on the Spatial Planning Act, the normal social risk is at least 2% of the value of the immovable property before the reference date. Case law has increased the normal social risk for developments in infill locations to, in principle, 5%. Based on current regulations and case law, the competent authority must assess for each request for planning damage what the normal social risk should be in this specific case.

The Environment Act[2 ] changes this. Based on the current legal text, the Environment Act applies a normal social risk of 4% for indirect damage. This is - unlike now - a fixed percentage.

For direct damage under the Environment Act, as under the Spatial Planning Act, there is no fixed normal social risk. It is considered unreasonable that an owner who suffers damage due to a decision that directly affects his plot must always pay part of that damage himself.

Transitional law

Because the Environment Act leads to substantive changes, transitional law is also important. In short, the transitional law means that the current planning damage regime will continue to apply five years after the Environment Act enters into force if damage was caused by a damage-causing decision as we know it in the Spatial Planning Act before the Act enters into force. If a request for a damage-causing decision or a draft of an ex officio damage-causing decision has been made available for inspection before the Environment Act takes effect, the planning damage law will continue to apply even if a request for planning damage is made within five years after the decision takes effect.

Tips for developers

With the Environment Act, loss compensation will become more predictable for developers. Discussions about the amount of the normal social risk are in fact a thing of the past. After all, a fixed percentage of 4% will apply.

It is also important to take into account that even after the Environment Act enters into force, current planning damage law may still be relevant for many years. Because of transitional law, the old law may still apply for more than five years, especially for planning (draft) decisions that were applied for or submitted for inspection before the Environment Act entered into force.

[1] The first blog explains the difference between direct and indirect plan damages.

[2] This article is based on the legal text dated June 4, 2021, consolidated version.