Managing the statutory requirement for biodiversity net gain (BNG) is one of the top practical headaches facing smaller housebuilders right now. And to complicate matters further, we await the outcome of a government consultation into potential changes to how it should be implemented for minor, medium and brownfield development. How can developers possibly plan in the meantime? MSP Capital’s Head of Valuation, Chris Wright, and Neil Woolgar, the property finance lender’s Senior Legal Consultant, offer their insight.

“It’s an unsatisfactory position to be in for many SME housebuilders and developers,” says Neil. “Not everyone has been ahead of the curve on BNG. Of course it’s important to protect the environment, that’s a given, but it can be difficult to get the balance right between cost considerations and doing what’s needed to demonstrate a percentage long-term uplift in habitat improvement. While the big boys can run with it more easily, many smaller players have less room for manoeuvre when it comes to their margins. On some projects we have supported through development or bridging loans, we were already seeing development costs rise by 70% to 80% before BNG. The Ukraine invasion sent the costs of raw materials through the roof and the industry had to contend with many other cost of living and cost of doing business pressures. Now, with BNG coming in, coupled with other environmental considerations such as nitrates mitigation, we’ve had instances where habitat-related payments have eaten up 10% of the GDV. There is also a dichotomy when you have a target for 1.5 million new homes nationally, yet you have a complicated requirement around biodiversity gain to solve before you even put a spade in the ground.”

Neil’s comments are echoed by Chris, who says: “We hear lots of comments and concerns from across our client base about BNG and the expectations and responsibilities being placed on SME developers. We do hope the government consultation will make things easier for them and, let’s not forget, the success of smaller developers will be crucial to the government achieving its 1.5 million new homes target.”

With the government’s response to the consultation still awaited, Chris and Neil list ten essential tips to help SME developers navigate the complexity of BNG:

• Be pragmatic and assume the current rules will still apply.
• Commission an immediate ecological check on the project to find out the current habitat ‘baseline’.
• Run the small-sites metric, or get your ecologist to run it, and produce a BNG statement.
• Draft on-site measures and an outline landscape and ecological management plan and cost them for 30 years.
• Query local strategies for nature recovery and ensure you understand the strategic significance of the site from the environmental and biodiversity point of view.
• Book a pre-app meeting with the local planning authority and bring your ecologist. Ask how the authority is interpreting de-minimis rules, what evidence they want, whether they expect purchases from local habitat banks or will accept off-site credits, and whether the Local Nature Recovery Strategy gives any extra multipliers/strategic significance. Get this in writing where possible.
• Prioritise on-site delivery first, then consider off-site routes.
• Be conservative in cost and timescale assumptions: allow a contingency for buying credits and for ecological timings. Credit prices and availability can vary locally. Don’t assume cheap, easy credits.
• Prepare contractual wording options for securing a long-term management agreement.
• Keep evidence and an audit trail. Green space around a new housing development. BNG places a responsibility on developers to be sustainable and manage the built environment with biodiversity in mind.

One of the key issues for a lender such as MSP Capital is the timing of a loan. Many developers are left in a catch-22 situation, Neil explains, in which planning permission has been granted but the formal BNG plan still has to be approved before development can commence.

Asked what the lender needs to do on due diligence in such circumstances before agreeing a loan, Neil says: “BNG represents a new departure in conditionality, meaning we can only ‘lend in principle’ until the BNG plan is approved. Mostly we are approached in line with the application for planning permission going in. If we have a good, long-standing relationship with the developer, and we’re confident they’re on top of BNG and have a good ecologist on board to calculate the 10% metric, then we might lend some funds when planning permission is granted.”

Chris adds: “There is no real change on due diligence as we still do all the necessary checks and will want to know that outstanding planning conditions can be discharged, for example under section 106, but otherwise we may be looking at a time delay due to the extra conditionality around BNG.”

For more information go to www.rdr.link/dbg021

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Biodiverse Consulting has announced the launch of its new ‘Biodiverse Brokering’ service.

The offering connects developers with trusted landowners, helping them meet the biodiversity net gain (BNG) requirements mandated by recent legislation with offsite units.

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The Biodiversity Net Gain law is reaching its first major milestone – its one-year anniversary. With a need to demonstrate a minimum 10% uplift in biodiversity for almost all schemes, how can wildlife mitigation solutions contribute to the wider biodiversity enhancement of a site? Here, Terry Wilkinson, Specialist Design & Application Engineer at ACO Water Management, dives into the mix of solutions housebuilders can deploy to help wildlife thrive.

Officially made mandatory in England for major developments in February 2024, and then subsequently for small sites two months later, the Biodiversity Net Gain (BNG) law is a landmark piece of legislation that affects nearly every housebuilder.

Any development with ten or more houses is typically classed as a major scheme. Meanwhile, small sites are those with nine houses or fewer on a site less than one hectare in size. Both must now evidence a minimum 10% uplift in biodiversity to be granted planning permission, and all developments (unless they are exempt) must also be managed and maintained over a 30-year period to comply with BNG.

However, 12 months on from BNG becoming a legal obligation, it brings up an important question – where are we now, and are housebuilders and developers enacting change?

BNG – Checking the current landscape
The evidence suggests that there is still much work to be done. A report commissioned by Wild Justice, ‘Lost Nature: Are housing developers delivering their ecological commitments?’ found worrying gaps in implementation and enforcement of biodiversity improvements.

After surveying 42 major housing developments across five Local Planning Authorities, equating to 6,000 houses and 291 hectares of land, it found that only half of the ecological enhancements (53%) that had been promised were actually on sites when they visited.

Going deeper, the not-for-profit nature conservation specialists uncovered a worrying trend for missing wildlife mitigation measures. These include hedgehog highways (83% missing), bat and bird boxes (both 75% missing), invertebrate boxes (100% missing), and refuges for reptiles and hibernacula (85% missing). It is important to note that these findings were made under the 2012 biodiversity requirements.

To prevent this from reoccurring with future developments, much more education and action is required, especially with the government pushing 1.5 million homes to be delivered by 2030.

Supporting housebuilders’ BNG goals
Of course, the BNG law laid down last year is still relatively fresh, and ACO is actively supporting developers to achieve their BNG goals to deliver change.

There are many innovative ways that housebuilders can help protect habitats and encourage wildlife to thrive. However, it is often not as simple as installing wildlife habitat boxes or tunnels, and hoping for the best. The devil is in the detail, as the saying goes, and this is definitely true of wildlife solutions to ensure they work in harmony for people and animals.

For example, housebuilders should aim to avoid using cementitious concrete-based wildlife tunnels, especially if their purpose is to assist amphibians like newts, frogs, and toads to cross under roads safely. The reason is that the dry, caustic properties of concrete can be toxic to these animals. Tunnels should also have slots to allow air and light through, as studies have shown animals may avoid tunnels if they are dark and they cannot see from one side to another. Concrete can also be harmful as it is porous and can draw moisture from amphibian’s skin if in direct contact. For this reason, ACO’s wildlife solutions and Climate Tunnels are made from a polymer concrete that is both non-toxic and non-absorbent.

Conversely, wildlife solutions must also be safe for humans and road traffic. For these reasons, ACO can adapt its wildlife solutions to prevent shoe heels becoming lodged in slots (see photo), as well as perform skid and slip tests, if needed.

Most importantly, tunnels have to be durable, especially if they will be installed within the surface level of the road where they will be subjected to heavy vehicular traffic. If not correctly specified, a tunnel can fail prematurely, making it both unsafe for people, vehicles, and animals, as well as bringing costly remediation works. Here, tunnels with a Load Class D 400 rating, certified to BS EN 1433:2002 are best practice and developers should actively seek these solutions.

A case study in Ashridge Farm
As the housebuilding industry looks for ways to mitigate its impact on biodiversity, Ashridge Farm in Wokingham is one highways and housebuilding project that developers can look to. Led by Balfour Beatty, the scheme included several innovative solutions to help enhance and protect local habitats. Linking a new housing estate to the wider road network, the contractor called upon ACO Water Management to establish safe routes for the animals when navigating roads.

ACO’s Climate Tunnel was chosen for the development, which can be installed flush with or below the road surface. For Ashridge Farm, both installation options were selected. The slotted ACO Climate Tunnel was installed at surface level, offering ambient conditions between the tunnel and open air thanks to the natural light and moisture levels achieved through the holes. A second ACO Climate Tunnel was installed underneath the road, offering an additional safe passage for the animals.

The tunnels were complemented with ACO’s Guide Walls, which help prevent small animals from climbing into the danger area. One key feature of the ACO Guide Wall is that it suppresses vegetation growth, providing a clear pathway for small animals. Balfour Beatty also introduced a range of biodiversity habitats across the project, including ponds, and soft landscaping, these all now work together to enhance the local habitats, and help them flourish.

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Has BNG been a success? Mark Topping, Director of Design, Lanpro, look at the highs and lows.

Biodiversity net gain (BNG) became mandatory for major developments from 12 February and for small sites from 2 April. Eight months on from the almost-universal application, Mark Topping, Director of Design, Lanpro, the multi-disciplinary planning consultancy, looks at the triumphs and tribulations.

Lanpro has long promoted and implemented what we refer to as ‘green infrastructure-led schemes’: a holistic approach to masterplanning which takes the existing environmental parameters as its base and delivers a scheme around this. This approach has been welcomed and encouraged by local planning authorities – both prior to BNG becoming mandatory and increasingly so following.

It goes without saying that BNG has had a significant impact on the development sector. BNG must now be considered at all stages of the planning process, from validation, through to assessment, discharge of conditions and reporting.

In most cases, BNG will require a combination of onsite and offsite habitat creation and enhancement to meet the objectives set out in the Environment Act. Importantly, significant habitat creation and enhancement must be managed and monitored for a minimum of 30 years.

For the purposes of the regulations, BNG is measured using the biodiversity metric calculator which has been developed by Defra. Net gain is measured as the percentage change in the biodiversity value of pre and post-development habitats. The minimum 10% gain must be achieved separately for area habitats, hedgerows and watercourses, if these different categories of habitat occur within the planning boundary.

Most would view the policy as a net gain in many respects: over time, it will result in considerable enhancements to natural environments and will see greener, healthier developments with high value and high quality habitats.

At this still relatively early stage, however, several issues remain unresolved. The need for developers to provide a like-for-like (or like-for-better) replacement in biodiversity terms is not well understood. An example is where an ‘area’ feature is lost due to development, such as grassland. This often cannot simply be offset by new woodland or hedgerow planting: it must often be a like-for-like replacement. This is also the case when a particular protected species of flora or fauna is lost. This causes an obvious challenge for developers.

One issue that developers must be aware of is the careful refinement of the planning ‘red line’: ensuring that areas superfluous to the development but which fall with the developer’s ownership (the ‘blue line’) are excluded from the BNG calculations. This can result in elements such as watercourses (which can be particularly challenging from a BNG perspective and require specialist ecological input) being removed from the assessment.

Another current issue in proving biodiversity net gain is a lack of registered off-setting sites, although it is hoped that this is a short-term issue. I know of several councils which are developing habitat banks but are currently in the process of finalising Habitat Management and Monitoring Plans and S106s. In some LPAs, there currently are no registered sites for BNG. This leaves the options as onsite, in proximity subject to legal agreement, starting negotiations with landowners, or the Environment Bank option.

Clearly one measure of the success of BNG is the roll-out of well-designed sites which achieve a 10% biodiversity uplift without losing developable land. Essentially this comes down to appropriate design of BNG and preparing designs that are maintainable in perpetuity. Clear management plans should be created to ensure this, plans which cover the full 30-year period to ensure landscape management is adaptable to evolving aspects of increased development in proximity, environmental changes in climate and disease. One aspect of is a clear understanding of the soil composition of sites and ensuring the correct specifications are proposed for the conditions available on site. This also comes down to protection of existing habitats and soils through construction as the areas of open space on site are often the locations of site compounds with associated areas of compaction, potential micro pollution from concrete spillage and dust, for example.

The greatest BNG concern is the risk that some sites will become unviable for development. While we have not seen this specifically, we did have an urgent submission for a small site prior to the 2 April deadline which may have otherwise been unviable. However, I suspect there are many land-banked sites which will no longer come forward as a result – though potentially those land banks could come forward as BNG sites themselves.

Inevitably there are many practical issues in relation to the provision of BNG, but essentially the principle is welcomed by those striving to create popular and environmentally responsible developments. The sense among the planning and development industry is that when these issues are ironed out, the standard of new development (and the impact on the surrounding area) will improve exponentially.

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Biodiversity Units UK is proud to announce the release of its latest report, “The BNG Report: Pricing & Key Insights – July 2024,” which offers an in-depth analysis of current pricing trends and market insights in the Biodiversity Net Gain (BNG) sector across England.

This essential resource provides developers and suppliers with critical information to navigate the evolving BNG offsite unit market.

The report, created in partnership with Arbtech Ecologists, compiles data from 38 BNG suppliers across England, examining pricing details, transactions and consulting with industry experts to present an average pricing list segmented by common habitats across two regions: England South and England North. These insights highlight significant price variances and supply levels, providing a detailed landscape of the BNG market at the end of the first half of 2024.

Key Highlights from the Report:

1. Regional Pricing Differences:

• The report clearly outlines the pricing differences between the North and South of England. For instance, the price for “Other Neutral Grassland” in the North is £27,825 compared to £28,875 in the South, reflecting a 3.77% variance. Similarly, “Lakes / Ponds Non Priority Habitat” is priced at £60,375 in the North and £65,625 in the South, marking an 8.70% difference.

  2. Market Insights:

• Education on BNG: There’s a notable lack of market education regarding BNG, with many developers embarking on their initial BNG deals, highlighting the need for enhanced training and resources.
• Registered Suppliers: The DEFRA ‘Biodiversity Gain Site Register’ lists only nine suppliers, indicating a limited number of certified providers.
• Development Challenges: A significant number of BNG sites are under development but do not have the prerequisite Section 106 agreements due to local authorities’ insufficient preparation for recent legislation, causing delays in compliance.
• Property Market Impact: The current downturn in the property market, compounded by high interest rates, has resulted in fewer transactions. However, potential market recovery could lead to rapid price fluctuations due to limited unit availability.
• Small Site BNG Demand: There is a growing requirement for ‘Small Site BNG’ and fractionalised units, yet the registry process remains complex, with a shortage of supporting providers.
• Rise in BNG Activities: Ecologists are reporting a surge in BNG-related surveys and contracts, with some experiencing revenue increases of over 250% in the past year, reflecting the sector’s growing significance.

Ian Hambleton, Founder, Director at Bio Units UK said “We’re very pleased to be able to launch this pricing report today, looking at costs of BNG Units at the end of July 2024. Created using data from 38 BNG suppliers across England, from industry contacts and connections and from transactions we’re seeing in the market. We hope these give Developers more knowledge on the costs of BNG and we’ll be updating these quarterly as the market evolves.”

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© Josie Elias / Adobe Stock

Amid the rush to meet regulatory demands, UK developers’ rigid approach to achieve biodiversity net gain (BNG) mandates is proving costly. Leading climate tech SaaS company AiDash have calculated that relying on traditional approaches to BNG is costing UK developers over £300,000 a day and has already cost £12 million since regulations came into effect on 12th February this year. 

With over 150,000 BNG project applications expected to be submitted annually, the potential additional costs are substantial: over £5 million for small sites and nearly £1 million for standard sites in total every month. If developers continue to rely on traditional and outdated BNG approaches, these costs will rise, potentially reaching a staggering £62 million by the end of the year. 

These calculations have been made by looking at the cost of assessing developments, consolidating results and creating a BNG plan per small and standard metric project using traditional methods, such as ground based ecological surveys and lower resolution mapping tools, versus adopting satellite and AI technology, and then the average number of standard and small project applications in the UK. 

Unnecessary additional costs will be even greater when taking into account other financial risks related to BNG. Traditional approaches can result in errors that lead to delays and rejections including failure to provide BNG baselines or BNG plans, providing inaccurate BNG baselines and plans, or an assumption that BNG credits will be readily available to meet BNG mandates. The risk of these mistakes is exacerbated by the 40% shortfall of qualified ecologists in the UK to meet the demands of BNG, and pressurised timelines due to new regulations now in place. 

For example, many mid-small developers are underestimating the level of change required, submitting planning applications without a biodiversity baseline or BNG plan. This oversight can cause significant delays in the application process for developers, ranging from 8 weeks to months at a time. Furthermore, it can render an application, which has already incurred significant costs, incapable of generating a 10% net gain without the purchase of costly BNG credits. 

Another example is failing to provide accurate biodiversity baselines. Discrepancies between the area of each habitat or incorrect classification within the same habitat category can dramatically change the value of BNG on a site. Incorrect baselines can result in application rejections, even if the plan meets 10% net gain. This is because 10% gain calculated from an incorrect baseline may not represent a true 10% gain. Such rejections can lead to delays of months or more, and in extreme cases, can put the entire project at risk. 

While opting for off-site credits may seem convenient, another costly error lies in assuming that BNG credits will be readily available and financially feasible. There are limits to where credits can be purchased; the development must be in near proximity and must gain approval from the Local Planning Authority. And while the base price in the original legislation was proposed to be £20,000 per credit, the latest guidance from Defra lists the lowest cost of  credits at £42,000 and the highest at £650,000, depending on habitat rarity. These credits are deliberately expensive, intended to serve as a last resort to encourage biodiversity to be improved on site and developers should strive to maximize on-site BNG. 

However, innovative new technologies are now available to UK developers that utilize AI and satellite imagery to ensure accurate and reliable habitat mapping, assessing large areas quickly and efficiently, and producing compliant BNG plans aligning with the new BNG framework. This technology is not only more affordable than existing methods, but also more accurate when used in collaboration with a skilled ecologist and much faster, turning weeks of work into days. 

“There is no doubt that BNG is critical for the UK environment – the clock is ticking for us to reverse decades of intense biodiversity degradation. However, UK developers are facing huge unnecessary additional costs due to reliance on rigid and outdated approaches to BNG,” said Shashin Mishra, VP of EMEA at AiDash. 

“It is time for a shift in approach, integrating AI and satellite technology as tools to complement and enhance the vital work of skilled ecologists. As the industry still grapples with high interest rates and recent setbacks in housebuilding – PMI readings in April were the lowest since January – it’s clear that developers must embrace new technologies to unlock significant savings and ensure the continued and successful delivery of new developments and BNG.” 

BNGAI by AiDash is a leading-edge software solution that uses AI and satellite technology to swiftly and accurately assess sites, ensuring compliance with BNG requirements. Since launching, over 75 of the top 150 developers in the UK have already signed up for the software to streamline BNG applications. 

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While February 2024 saw the rollout of the mandatory Biodiversity Net Gain (BNG) requirements for larger developments, small sites had until April to adapt. Lucy Dixon, head of global new markets at Veriforce CHAS, outlines some key considerations for small site developers aiming for compliance.

The Biodiversity Net Gain (BNG) framework, mandated under the Environment Act 2021, officially launched on February 12^th, requiring a minimum 10% BNG for planning permission with an extended transition period for small sites ending on April 2^nd. This means developers must submit plans to their Local Planning Authority (LPA) showing how their project will contribute to an overall increase in the quality or quantity of the natural habitat of the site on which they are situated by a minimum of 10% – with some LPAs demanding increases of more than 10%.

For major developers, incorporating BNG into project designs will likely not be entirely new. For smaller projects, however, the implications of the policy might be more keenly felt. Constraints in resources, finances and the space available to implement biodiversity offsetting measures can all pose a challenge to the viability of small site developments.

English street

Purpose of BNG
The fourth State of Nature Report, unveiled in September 2023, highlighted the alarming decline of biodiversity in the UK. The report underscored the UK’S ongoing environmental degradation, which is already acknowledged as one of the most nature-depleted nations globally. The data revealed a troubling trend, indicating that since 1970, UK species have, on average, experienced a 19% decline, with almost 1 in 6 species (16.1%) now facing the imminent threat of extinction. It’s clear that urgent action is required, and the BNG framework supports this.

In the context of the BNG framework, small residential development sites are defined those with dwellings numbering between 1-9 on a site measuring less than 1 hectare, or in cases where the number of dwellings is unknown, on a site area less than 0.5 hectares. Certain exemptions exist within the BNG policy, notably for small self-build and custom homebuilding sites.

Appointing a competent person
Developers overseeing small sites must designate a competent person (referred to as the SSM ‘user’) to carry out a Small Sites Metric (SSM) assessment using the SSM tool. A competent person does not have to be an ecologist, but they must have the necessary knowledge and experience in line with BS 8683:2021 Process for designing and implementing biodiversity net gain to perform and review SSM calculations.

SSM users should demonstrate competence in the following areas: identifying pre-development habitats on the site; and understanding management requirements for habitats to be created or enhanced in the post-development landscape design.

The SSM can be used on projects that qualify as a minor development and on land where there are no priority habitats present. The list of priority habitats requiring conservation include, for example, ancient hedgerows, traditional orchards and lowland meadows. Larger developments should refer to the Statutory Biodiversity Metric.

How can developers achieve BNG?
Government guidance sets out three ways a developer can achieve 10% BNG:

• They can enhance and restore biodiversity on-site (within the red-line boundary of a development site).
• If developers can only achieve part of their BNG on-site, they can deliver through a mixture of on-site and off-site. Developers can either make off-site biodiversity gains on their land outside the development site or buy off-site biodiversity units on the market.
• If developers cannot achieve on-site or off-site BNG, they must buy statutory biodiversity credits from the government, with the government using the revenue to invest in habitat creation in England. This must be a last resort.

Developers can combine all three options but must follow the steps in order. This order of steps is called the biodiversity gain hierarchy.

For small site developers, particularly those with limited land availability, familiarizing themselves with the details of the biodiversity gain hierarchy is key to the success of their projects achieving planning permission.

Incentives for developers
BNG policy offers opportunities for innovation, especially for smaller developers. For example, incorporating green infrastructure or biodiversity-friendly design elements (a wildflower roof) can enhance a project’s marketability and value.

Fulfilling BNG requirements can foster collaboration, easing compliance burdens. Engaging stakeholders like landowners, ecologists, and environmental organisations early in the planning process can address potential issues. Pooling resources and expertise not only maximise biodiversity enhancement for the current project but also establish a cost-effective blueprint for future developments.

While mandatory BNG poses challenges for small development sites, it also presents opportunities for collaboration, innovation, and creative problem-solving. Recognising the intrinsic value of nature is essential for contributing positively to biodiversity conservation and ensuring its significance for current and future generations.

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Planners across the public and private sectors have reported report low levels of confidence in their ability to handle new Biodiversity Net Gain requirements in the planning process, according to a survey from the Royal Town Planning Institute (RTPI).

The measures, introduced under the Environment Act, came into effect on February 12^th and require local planning authorities (LPAs) to assess and seek mitigation of the expected biodiversity net gain impact of planning proposals.

However, an ongoing survey of RTPI members found that:

• 81% of planners in the public sector need further ‘guidance, advice and support’.
• 68% of all planners need more staff and skills, and 61% require more case studies of best
• 69% of planners in the private sector whose developments and land will now need to demonstrate BNG gain as part of the planning application process, want more case studies of best practice.

The updated figures also show that 41% of public sector planners still cannot confirm whether they’ll have access to the necessary ecological expertise to comply with the new BNG requirements before implementation.

Victoria Hills, chief executive of the RTPI, said: “We made it clear to the Government that, without adequate funding, new BNG requirements could add disruption and delays in already overstretched LPAs.

We’ve recently seen almost a thousand RTPI members sign up for a webinar on BNG in the hope of finding out information on the process and will be holding more events in the future to help planners implement these changes effectively.”

Planners are encouraged to report any issues with the implementation of BNG using the RTPI’s survey platform, with input helping the Institute to provide Government with a detailed picture of the challenges BNG is causing.

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