Gearing up to Biodiversity Net Gain (BNG) market

12 February 2024 saw the long-anticipated introduction of the Biodiversity Net Gain (BNG) regulations. Under the new regulations all new developments are set to have a positive impression upon the environment by guaranteeing that any habitats impacted by build works are left in a measurably better state post development. It will not always be possible for BNG targets to be achieved onsite and some developers will therefore need to look to landowners to assist them in obtaining their BNG goal offsite. This creates a new opportunity for landowners wishing to enhance biodiversity on their own land whilst additionally providing a new source of income or capital.

Topics to be answered in this article

What is Biodiversity Net Gain?

The BNG is a new planning condition that requires any new development site to achieve a 10% gain in biodiversity by a target date. Biodiversity is the range and variety of plants, animals, trees, fungi etc within the area.  Once the target is achieved, developers must ensure the habitats created or enhanced are managed and maintained for a minimum of 30 years. The impact of these new regulations will result in an increase in biodiversity levels following development. 

Schedule 14 of the Environmental Act 2021 came into force on 12 February 2024 and as a result all new developments (with a few exceptions, e.g. permitted development rights) will now be subject to a mandatory planning condition to comply with BNG regulations. 

How is Biodiversity Net Gain measured?

Complex but multiple factors such as:

  • Size
  • Strategic significance
  • Quality
  • Local importance
  • Diversity of ecology
  • Connectivity

Details in this link.

BNG is measured using a Government designed metric tool to calculate the biodiversity of an area of land. Many factors are taken into account when calculating BNG such as the type of habitat present on the site, the size of the site, the condition of the habitats present and if there is any strategic significance in the habitat present.

These calculations are critical and the Local Planning Authority may reject calculations which they do not believe have been carried out correctly, it is therefore essential that an ecologist is appointed to accurately calculate the correct biodiversity value of land. Further information on how BNG is calculated can be found at https://publications.naturalengland.org.uk/publication/6049804846366720

What is the BNG market?

It may not always be possible for developers to increase BNG by the mandatory 10% onsite and, if this is the case, the BNG regulations allow the developer to look off site to purchase additional ‘units’ of land to satisfy their BNG requirements. 

If a landowner wishes to make offsite land available to a developer for BNG purposes there are several options available:-

  1. Sell BNG units directly to a developer;
  2. Collaborate with other land owners or local non-government organisations to sell BNG units over a wider area and manage the land together;
  3. Instruct a third party habitat bank operator who can assist in finding developers in need of credits. 

Landowners will need to register their land if they are proposing to make this available for BNG units. As part of the registration process the biodiversity value of the land will need to be entered, this can be obtained using the same metric tool discussed above. Some Habitat Bank Operators may register the land on the landowners behalf. 

Units are sold for a 30 year period during which the landowner will remain responsible for the management and upkeep of the land. 

Unit sale prices should reflect the 30 year management period and take numerous factors into consideration e.g. the costs associated with the creation or enhancement of the habitats, management and staffing costs, ecologist or expert costs, monitoring and reporting costs, inflation, machinery and insurance and any other costs which may be incurred over this period. Each agreement for sale must be individually negotiated and set out the terms and conditions of the sale, sale price and preferred method of payment. Landowners may choose how they wish to receive the sale proceeds (e.g. in a lump sum or in annual instalments throughout the 30 year period). 

It can be daunting embarking on a deal within this unfamiliar territory but agents can be appointed to help you with the initial negotiations and to assist in brokering deals. We are also on hand to assist and advise you on all aspects of the legal agreement and ensure this is drafted to best protect your interests and needs. More information on the sale of BNG units can be found at https://www.gov.uk/guidance/sell-biodiversity-units-as-a-land-manager   

What are the benefits to a landowner of the BNG market?

The BNG regulations have opened up the opportunity for landowners to utilise surplus land towards securing an additional source of capital / income by offering their land for management and enhancement of BNG habitats. It may also be possible to combine BNG with other existing habitat creation or enhancement projects. Any landowners who have already entered into strategic land deals with developers may be interested to consider whether the BNG requirements could be satisfied on any nearby or adjoining land owned by the parties to avoid marketing costs. 



How can Goughs help?

As Housebuilding and Development specialists, Goughs understand the inner workings of the development process and can offer experienced and tailored advice to ensure that your interests are properly protected throughout the transaction. We will use our expertise to ensure your BNG agreement is correctly structured to best reflect your aims and our friendly and approachable team will guide you through every step of the process to ensure you feel confident and comfortable throughout the transaction.

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Author Bio

Gemma Creighton

Law is an area which has interested me from an early age. After completing my first work experience in a solicitors office at age 15, I knew law was always something I would want to pursue in the future. I find it intellectually challenging and enjoy the diversity that each day brings.

I have worked as a Legal secretary from the age of 18 and with my husband being in the military, I moved around quite frequently. It was in 2014 that I decided to begin my law degree, completing it in 2020. Prior to starting my training contract I was working as a Paralegal in the Real Estate department at Goughs. Before starting at Goughs I had been working as a Paralegal in the Stone King Commercial Property team.

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