BNG – steady market for habitat units as activity increases

Market activity in habitat units is picking up, bringing greater demand for those created by landowners.

While lot sizes vary widely from 0.01 up to 260 units, Devon-based national broker Townsend Chartered Surveyors is seeing demand for an average of just over 16 units.

This is a considerable increase compared with six months ago, when the average was about eight units.

See also: BNG unit demand to rise on big infrastructure projects

Farmers Weekly contacted several brokers who put prices for common types of grassland habitat units at anything between £17,000 and £30,000, depending on lot size and location. This range represents a softening in some areas.

The next big market driver will come in May 2026 when nationally significant infrastructure projects (NSIPs) are brought into the biodiversity net gain (BNG) regime, requiring high numbers of units to compensate for the development of rail, roads and other infrastructure such as schools, hospitals and prisons.

Positive impact

That demand will take time to filter through but it is going to have a very positive impact, says Hugh Townsend, founding partner of Townsend Chartered Surveyors.  

Among broad habitat types, the demand seen by his firm shows that three-quarters of biodiversity unit buyers need some form of grassland, with just over one-third needing heathland and shrub, and almost one-third individual trees.

More than 18% want hedgerow units and 12.5% watercourse or woodland and forest units to compensate for losses on development sites.

Sam Paske is a director of Northamptonshire-based Integrated Land Management (ILM), which farms in its own right, manages farms, brokers BNG units and develops habitat banks on its own account.

ILM has 15 habitat sites, mainly in the Midlands and southern England.

Speed of demand

Sam characterises the market as steady and at the mercy of the planning system in terms of the speed of demand coming through.  “But it is ramping up,” he says. “Prices are very varied depending on location and who you’re competing with.”

London-based broker Biodiversity Units UK represents many habitat banks and produces a quarterly market update.

The most recent, marking the state of play in June, showed reductions of up to 11% in the value of “other neutral grassland” habitat type units compared with its February report.

© GNP

However, the market is very localised and there were increases in other unit types.

A short supply of less-common units such as wet woodland caused a steep rise in the price in this category, which rose 42% in the North, to £50,225 a unit, and 29% in the South, to £49,639 a unit.

Founder director Ian Hambleton says that most enquiries are for anything up to 20 units, but that occasionally 100 units are needed.

Regional opportunities include the Thames Valley area, where units are in demand because of the scale of development.

The Manchester Conurbation has good demand and is an urban designation with few local habitat banks available to it. The South Coast Plain, which is a national character area (NCA), also has strong demand for units.  

England has 159 NCAs, each representing an area of distinct and recognisable character at the national scale. NCA boundaries follow natural lines in the landscape, rather than county or district planning boundaries.

The information in an NCA profile aims to help guide land management and other activities in the area.

The June Biodiversity Units UK report also noted rising demand for watercourse units, and very limited supply.

As for any unit that is required but not available in the local planning authority area (LPA) where a planning permission has been granted, developers are forced to buy units from other LPA areas, usually incurring a higher charge.  

More sites on Natural England register

There are now 125 habitat bank sites on the national register, which is administered by Natural England (NE). The number has grown rapidly in the past few months, doubling between February and June.

Fixed or flexible phasing of habitat banks

Those thinking about setting up a BNG habitat bank, or who are in the process of doing so, should consider how to phase their habitat creation.

Depending on how this is done, flexibility in land use can be retained depending on how the market is developing, says Hugh.

Brokers advise landowners to watch the NSIP planning process over the next few years so that they can be informed about what is going to take place in their local planning authority area and consider creating units to cater for this potential demand.

Different planning authority approaches

BNG requirements apply only in England. Some planning authorities have been more proactive than others in encouraging and facilitating BNG plans.

For example, North Kent Plain NCA, also known as Kent and Medway, has developed a biodiversity gain statement to guide applicants through the information requirements for BNG.

Buckinghamshire council has been highlighted by landowner advisers as a proactive authority, offering both Section 106 legal agreements and conservation covenants for landowners who want to engage in BNG unit creation.

It also has detailed habitat bank criteria to help secure the best biodiversity outcomes for the county.

Dispute resolution in BNG assessments

There is the possibility of dispute over BNG, its potential and its achievement, ranging from different baseline assessments by developers and environmental bodies or local residents, to whether the stated habitats have been created.   

The Environmental Law Association has called for a mechanism to resolve such disagreements.

Issues over liability for failed habitats are likely to arise, particularly where the mitigation is on-site.