BNG: Unit demand to rise on big infrastructure projects
© Polymedia Two consultations issued in late May will affect demand for biodiversity net gain (BNG) units created by landowners for sale to developers.
In England, developers need to buy units to make up for the habitat loss on their construction projects and are under a legal obligation to deliver a measurable 10% positive uplift on the biodiversity associated with their sites.
The gain can be implemented on-site or on other land, so it provides a potential income for farmers through 30-year agreements under which the biodiversity units are created.
See also: Kent landowner’s BNG project highlights the market challenges
While the consultation on small sites (fewer than nine dwellings on up to 0.5ha) is likely to result in less demand for BNG units in this category, the approach to nationally significant infrastructure projects (NSIPs) looks likely to outweigh that loss considerably, say advisers.
NSIPs are large-scale development projects in England or Wales including energy, transport, waste, wastewater and water.
These were initially planned to fall within the BNG net from November this year, but this has been delayed until May 2026.
Small sites
On small sites, the consultation sets out that developments of nine houses or fewer on sites of 0.5ha or smaller could be exempted from BNG requirements altogether, reducing demand for units, advisers say.
In addition, the BNG requirements for a new class of development, medium sites of up to 49 houses, may be simplified.
Broker Hugh Townsend, of Townsend Chartered Surveyors, says: “Defra’s consultation on small sites BNG, published on 28 May, may initially appear unsettling to those creating or selling units.
“However, the consultation is not as straightforward as it may seem at first glance. There is in fact far more good news than bad. These sites, in our opinion, were never going to be the future of the BNG market.”
It is estimated that small sites account for 70% to 80% of BNG transactions, often requiring fractions of a unit.
This large proportion could be explained through the frequency of such developments, says Hugh.
While medium to larger sites may take longer to obtain planning permission, and larger sites can take years to plan prior to submitting for planning, so gradually the proportion represented by smaller sites may reduce. Â
While the onus is on developers to maximise on-site BNG measures, he also feels the current high level of mitigation seen on larger development sites is not going to be sustainable.
Small sites issues
There have been challenges in implementing BNG on small sites. The Chartered Institute of Ecology and Environmental Management suggests changes including:
- Review of the de minimis threshold to avoid disproportionally high administrative and legal costs of delivering BNG for very small scale developments. The threshold applies where a small site does not affect a priority habitat, affects less than 25sq m of non-priority onsite habitat such as modified grassland, or affects less than 5m of non-priority linear habitats such as hedgerows or watercourses.
- Introduction of a simple biodiversity tariff system as an optional alternative to an offsite credit.
- Review of the BNG metric to provide more flexibility in condition assessment for baseline habitats and more recognition of the contribution wildlife-friendly gardens and ecological features can make to delivering onsite gains, especially in urban areas.
- Remove condition assessment altogether for low-distinctiveness areas.
- A simpler version of the metric for use on sites where only low-distinctiveness habitats are present.
- Clarification of what is meant by a competent person in relation to use of the small sites metric.
- Better use of pre-occupation planning conditions and post-development auditing by competent persons to confirm delivery of the required biodiversity and landscape enhancements.
- Development of local habitat banks offering small-sized biodiversity units, and fractions of units, at an affordable cost.
Streamlining requirements
As well as a possible full BNG exemption on small sites, further reform options include simplifying the Defra small sites metric by which biodiversity baselines and BNG uplifts are calculated, and whether medium sites should also be able to use the small sites metric.
The consultation also suggests alterations to the metric that would make provision of off-site BNG easier.
Environmental groups have condemned the idea of exempting small sites, saying that it could scupper the BNG policy and put nature at risk.
Nationally significant projects
NSIPs come into the BNG net in May next year and in planning terms are treated separately in that they apply for a Development Consent Order (DCO) directly to the Planning Inspectorate.
It then makes a recommendation to the relevant secretary of state, who decides whether development consent should be granted.
NSIPs will need to submit BNG plans as part of their DCO application. This is in contrast to other planning applications where BNG plans are submitted once permission is granted.
Also, unlike applications which go through the “normal” planning system, NSIPs will have to secure all or most of their biodiversity units before any development begins.
NSIP applicants can choose to deliver BNG off-site in the first instance, which is another departure from the system for other developments, which must deliver on-site BNG as the first priority.
This change is designed to reduce the incentive to use compulsory purchase to expand the area of an NSIP site with the aim of delivering BNG entirely on-site.
Government guidance on compulsory acquisition sets out that applicants should be able to demonstrate that all reasonable alternatives have been explored.
Specific guidance on compulsory purchase of land for BNG is awaited.
The consultation says the government expects that once BNG is implemented for NSIPs, the availability of off-site units and statutory biodiversity credits will mean that applicants are unlikely to use compulsory acquisition of land.
This is whether on- or off-site, to meet their BNG requirement, unless there are exceptional circumstances.
Temporary land take
The consultation seeks views on whether there should be a bespoke policy on delivering BNG where land is temporarily taken for construction of NSIP schemes.
There have been concerns that biodiversity gains may not be possible on this temporary land, as landowners may not be willing to tie their land up in BNG for 30 years.
The document does not recognise that the nature of NSIPs in development terms is very different from a typical Town and Country Planning Act, says law firm Pinsent Masons.
It points out that it does not account for the fact that many projects involve extensive linear and/or underground elements.
There is a presumption that all permanent land within a site boundary, including easement widths, needs to be considered as part of calculating the pre-development biodiversity value for a project.
Pinsent Masons senior associate Matthew Fox says:
“This means that if this regime is brought into effect in the proposed form, and unless developers would be able to manage a programme such that they could make an assumption that all affected land can be restored within two years of disturbing it, NSIP projects could be left needing to meet extensive BNG requirements which may only be able to be delivered off-site, leading to cost and programme implications in trying to negotiate commercially suitable deals in sufficient time with landowners and BNG brokers”.
Hugh Townsend says the proposal to allow the use of off-site mitigation units as an initial option, rather than looking at providing onsite habitat first, will increase the demand for off-site units.
“Although slightly delayed until May 2026, we expect the corresponding increase in demand will make up for the losses and more, should an exemption be given to small sites,” he says.
Exclude farming developments – NFU
The NFU wants all agricultural developments to be exempt from the minimum 10% BNG requirement, arguing that infrastructure such as horticultural glasshouses and poultry housing are vital for food security.
“The added costs and land pressures of current BNG requirements can often make these projects unviable – particularly at a time when farmers are facing significant cashflow pressures,” says NFU vice-president Rachel Hallos.
“The government has repeatedly stated that food security is national security, and if we are to meet the government’s own ambitions for investment and growth, we need planning policies that boost our food security while also delivering for the environment.
“We believe environmental delivery and sustainable food production can and must go hand in hand.
“That means making better use of voluntary schemes and new environmental markets and moving away from restrictive planning policies.”
Halnaker Hill Farm BNG site
Halnaker Hill Farm © Polymedia
More than 120ha of arable land in the South Downs National Park is to form one of the UK’s largest BNG projects.
Habitats including hedgerows, grassland, woodland and wildflower meadows will be created at Halnaker Hill Farm near Chichester, providing 856 BNG units for sale.
The regenerative farming plan for the land also includes planting 20,000 trees and 7km of hedgerow, and the return of Sussex cattle.
The site will be managed by developer Kingsbridge for Halnaker Hill Natural Capital.
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