Biodiversity net gain: what it means for the built environment

The impact of the new biodiversity net gain (BNG) rules will be felt by landowners, developers (especially housebuilders), funders and occupiers alike. 

The guiding principle behind the new rules, which are being launched in a bid to halt wildlife and habitat destruction, is that any development requiring planning consent should leave the natural environment in a measurably better state than before, by delivering improvements through habitat creation or enhancement (10% gain in net biodiversity specified, achieved on or off-site or via credits purchased from accredited bodies) and by avoiding or mitigating harm. So, what are the pros – and cons – of the new rules for the built environment?

The biodiversity hierarchy set out in NPPF 21 is likely to be maintained in its current formulation. Although the proposed exemption for existing sealed surfaces may help landowners with urban portfolios, almost every other part of the industry will be affected. BNG requires a demonstrable, evidence-based increase in natural capital assets compared with the pre-planning position. For example, housebuilders would need to plant native trees or create wildflower meadows, ponds, living walls and roofs. The enhancements are intended to last for at least 30 years with provision for on-going evaluation. 

BNG will be enforced via planning conditions (with no development able to commence unless a biodiversity gain plan has been submitted and approved by the Local Planning Authority) via Section 106 obligations and by the new conservation covenants. 

Apart from the obvious environmental benefits, another positive is that BNG is an excellent way to boost ESG credentials. It also forms part of a growing requirement for sustainable development and will help to attract a green premium and secure investor and occupier demand.

There are interesting financial upsides too; partnering with national water companies will reduce pollution incidents (and financial penalties) through reduced surface water runoff, and planting new habitat is a good way to attenuate urban flooding, resulting in significant financial benefits for government and the insurance industry that can be shared.

However, BNG will involve early engagement with the LPA on how to assess, measure and record a site’s biodiversity baseline, and agreement on a biodiversity gain plan, which will impact upon design and development appraisals. Plans will need to include measurement criteria and auditing procedures, together with a detailed ongoing management strategy, including a system for regular and proportionate monitoring based on geotagged location, time and date specific data and analysis. This is no small task bearing in mind the 30-year timeframes involved and may push developers towards purchasing credits. It’s likely to be a costly and time-consuming exercise and open up further opportunities for challenge. 

A fresh BNG plan will be needed for each phase of a development, although S73 applications will only require a fresh BNG plan where the original permission was subject to BNG. 

On-site BNG may exacerbate viability problems, so third-party involvement is inevitable and that brings with it risk. It remains to be seen how quickly the market responds with the provision of habitat banks and it is unclear how the market for biodiversity units will develop. Natural England’s Biodiversity Gain Site Register will not operate as a marketplace platform for buying and selling units, although the organisation will sell statutory biodiversity credits on behalf of the secretary of state.

Housebuilders, in particular, are raising cost concerns but, rather than concentrating on yet more housing demand stimulus, the secretary of state should focus on exemptions that will facilitate affordable and rented housing by small housebuilders and housing growth in regions where viability is an obstacle. The proposed small sites exemption could be invaluable in encouraging the return of small housebuilders, a crucial goal which has proved elusive.

Finally, will government grasp the nettle and use BNG to drive new green jobs and regional growth, or will we just see higher taxes and more state intervention? As with the whole of the government’s sustainability and net zero strategy, the opportunities for growing the green economy are there, but the clock is ticking.