What do businesses need to understand about the UK biodiversity net gain regime?

Biodiversity net gain, or BNG, refers to the principle whereby a developer is required as part of its planning application to evidence a net gain in the biodiversity of a site it is developing. As a concept it has been around for a few years already, with different local authorities adopting varying approaches.

Some local authorities did not require it at all, some only required evidence that there would be no net loss in biodiversity, while others required evidence that a specific minimum gain would be achieved in order to approve the application. From 12 February 2024, a minimum gain of 10% will be a statutory requirement which applies to the majority of planning applications.

Why does BNG matter?

How to deliver BNG will need to be a consideration early on in the development process. Most developments that require planning permission will need to evidence that a gain of 10% will be achieved when comparing the biodiversity at a site pre- and post-development, because there are few exemptions to the minimum requirement.

If the 10% gain cannot be achieved on the development site, the developer will need to evidence the gain by way of off-site units or, if that is not achievable, the government will make statutory credits available.

Which businesses does it apply to?

As BNG will be a requirement for the majority of developments, it will apply to any business which is carrying out a development that requires planning permission.

There are only limited exemptions as follows:

• small sites, for example a residential development where the number of dwellings is between one and nine, or if this is unknown, the site area is less than 0.5 hectares, although BNG will apply to these developments from April 2024;
• developments that do not impact a priority habitat and impact less than 25 square metres (5m by 5m) of habitat and/or five metres of linear habitats such as hedgerows;
• householder applications;
• self-build and custom build applications which consist of no more than nine dwellings, are on a site that has an area no larger than 0.5 hectares and which meet the statutory definition of self-build or custom housebuilding;
• developments undertaken for the purpose of fulfilling the BNG planning condition for another development; and
• any development forming part of, or ancillary to, the high-speed railway transport network.

What should businesses do?

Any business that regularly submits planning applications would be well-advised to engage a technical consultant who can assist with the business's overall BNG strategy as well as on a development-by-development basis.

Businesses with an existing pipeline of scheduled developments that are yet to obtain planning permission will need to ensure that they have properly taken into account the BNG requirements that they will need to comply with as part of the mandatory regime.

Any new planning applications submitted after 12 February 2024 will need to adhere to the legislative BNG requirements. In addition to seeking technical advice, businesses may want to obtain legal input to ensure they are satisfying the necessary requirements.

The gov.uk website has some useful guidance regarding the operation of the BNG regime. Businesses may choose to develop a suite of precedent documents (for example where looking to acquire off-site biodiversity units) or checklists to ensure a consistent approach is taken to BNG delivery.

What are the rules?

The rules require that the biodiversity of a development site is assessed by reference to a quantity of biodiversity units. These can be habitats (such as grassland), watercourses or hedgerows – there is a government metric which should be used to calculate the relevant quantity of units.

Once planning permission has been granted, the developer will need to submit a biodiversity gain plan which will evidence the number of biodiversity units pre-development, together with how it will achieve a 10% increase in the number of biodiversity units once the development is completed. Approval of the plan will be a pre-commencement planning condition.

Where the gain cannot be achieved wholly or partly on-site, the developer will need to source off-site units to make up the 10% gain requirement. Under the planning permission, the occupation (or operation, as relevant) of the relevant development will not be permitted until the works/proposals outlined in the biodiversity gain plan have been completed.

The gain will need to be monitored and maintained for 30 years, as set out in a monitoring and maintenance plan for the development.

Specific challenges or opportunities

There will be a period during which businesses, regulators and consultants will be getting up to speed with the mandatory BNG regime. This may lead to additional costs and delays to development programmes.

Another significant challenge relates to the costs of the new regime. Some developers may be able to achieve the required 10% gain on-site, but it is very likely that specific works will be required for this and land may need to be set aside for BNG, reducing the area available for development.

Developers who need to source biodiversity units off-site should be aware that in the early days of the regime there may be a limited supply of off-site units and those that are available may be costly. Should no off-site units be available, developers will be forced to resort to the statutory credit regime which is an expensive option with credits ranging from £42,000-£650,000 each. The initial outlay may therefore by significant and there will be ongoing costs to factor in as well for monitoring and maintenance.

Businesses that develop sites for onward sale will need to ensure contractual mechanisms are in place to pass BNG obligations on to successors in title.

The BNG regime presents an opportunity to those who have land they can set aside for biodiversity enhancement. Subject to complying with the various criteria, land to be developed for BNG can be entered into the off-site gain register and the resulting units can be sold to developers needing to satisfy the BNG requirement.

Impact on businesses

As the concept of BNG is not new, a number of businesses already have strategies in place to deliver net gain. Developers have already had to start considering biodiversity net gain as part of planning applications, either because a particular local authority has chosen to include it as a planning condition outside of the mandatory regime or because the timing of the planning application means the regime will be in place by the time the application is submitted.

However, with the introduction of a standard 10% gain under the mandatory regime, more businesses are now having to consider how best to deliver and maintain the gain.

As well as the additional cost implications, businesses may require new precedent documents and potentially need to train members of staff and engage legal and technical advisors to assist.

Wider implications

The impact of the BNG regime is likely to be felt elsewhere, including on real estate investors as a result of the costs it will add to development (particularly in respect of planning and design costs). Investors are also likely to need to monitor the gain which will require additional resource, especially where off-site gain is used in connection with a development.

There could also be an impact on the cost of real estate. For example, sites where achieving a 10% gain will be straightforward may in future attract a premium.

If you would like to discuss any of the issues raised in this Insight, please get in touch with one of our experts below