What is the Biodiversity Net Gain?

In February 2024, the Biodiversity Net Gain requirement was introduced to apply to major developments and was expanded to include small developments in April 2024. From now on, developers will have to not only preserve but also enhance the biodiversity of their developments by 10% above the pre-development levels. Tools such as biodiversity units and credits can help developers achieve this.

What is the Biodiversity Net Gain requirement?

Under Schedule 7A of the Town and Country Planning Act 1990 the Biodiversity Net Gain requirement (BNG) was introduced with the aim of  improving natural habitats. It requires developers to improve the biodiversity of each habitat category on their development site by 10% above pre-development biodiversity levels and to maintain this for at least 30 years. If developers cannot clearly demonstrate viable plans to achieve the BNG their planning applications will be refused.

Developers must follow the biodiversity gains hierarchy. This requires them to first minimise damage to biodiversity and then enhance biodiversity through on-site measures (i.e., within the boundary of the development site). If the BNG cannot be fulfilled solely through on-site measures developers must then buy off-site biodiversity units from third-party land managers. If they still cannot fulfil the BNG they can buy statutory credits – the government intends these to be expensive to deter reliance and make them a last resort to achieving the BNG.

The government has admitted that many developers will be unable to wholly fulfil their BNG targets through on-site measures, making it likely that off-site units will be essential for developers to meet the BNG. This new market of biodiversity units enables land managers to monetise land they own or manage by selling biodiversity units to developers (for more information see our article on how to sell your BNG units).

Biodiversity units vs biodiversity credits

A biodiversity unit is a measurement of the biodiversity value of a habitat. They are measured in standardised units by using the official ‘statutory biodiversity metric.’ This measures units by assigning numerical values for various types of habitats (e.g. grassland, hedgerows, lakes etc) depending on factors such as the habitat’s size, quality and condition, location, distinctiveness, diversity or rarity (including the species in it), its strategic significance, and type. There are two types of biodiversity units; Area Units (e.g., grasslands and woodlands) and Linear Units (e.g., hedgerows and rivers) which are treated separately. Developers must usually achieve a net gain in both measurements – i.e., creating woodland cannot offset destroying a hedgerow.

Biodiversity units are sold on the private market by land managers or landowners (collectively referred to as land managers) who create or enhance the habitats on their land to sell to developers to help them fulfil their BNG target where they cannot fully meet them through on-site measures. The units must be off-site, i.e., be outside the red line boundary of the developer’s site.

Biodiversity credits (known as statutory credits) are the last option for developers to meet the BNG once they’ve exhausted on-site and off-site options. These credits are sold by Natural England on behalf of DEFRA and are used to fund habitat improvements across the UK. They can be used as an add-on to on-site and off-site biodiversity units or to fully fulfil the BNG. The credits can be purchased using the credit sales service and are predicted to be phased out once the private market for biodiversity units has matured and availability has improved.

The government has ensured these credits are the significantly more expensive option to ensure the private market place remains the most viable option for developers to meet the BNG where on-site measures are insufficient by:

1. Applying a spatial risk multiplier (SRM). This requires 2 statutory credits to be bought for every 1 biodiversity unit required. With 1 credit currently going for between £42,000 for a habitat of low distinctiveness to £650,000 for a lake with high-distinctiveness this doubles the statutory credits required to meet the BNG and ensures they do not compete with the private market for biodiversity units.
2. Requiring developers to prove they cannot meet the BNG through on-site and off-site measures by providing evidence they considered such measures and explaining why they were not reasonable. If they need more than 0.25 biodiversity units developers must also demonstrate they approached three local or national suppliers, habitat banks, or trading websites and that no off-site options were available.

It is important to note the amount of habitat required to compensate for loss varies depending on the factors listed above. For example, replacing 10 hectares of woodland could require significantly more than 11 hectares of new woodland, despite 11 hectares representing a 10% net gain, due to the time it takes the new woodland to reach the same condition as the one destroyed. The type of biodiversity units lost is also important as the developer must replace that type of unit, e.g., a hedgerow must be replaced with the equivalent amount of hedgerow units and the units created or enhanced must match or exceed the distinctiveness of the biodiversity lost. Developers will need Natural England’s permission to offset land in the highest distinctiveness tier.

Developers may also face challenges to wholly fulfil their BNG on site. Developments in built-up areas may face access and safety issues while developments in rural areas will struggle to meet the BNG where they are building on already established habitats. This makes it likely the private market for biodiversity units will serve an essential part of developers fulfilling their BNG targets and poses a potentially lucrative business for land managers to monetise and repurpose land.

What initial practical steps will developers need to take?

For most developments a competent person must be consulted before the development takes place. For large sites a competent person will be a qualified ecologist and for small sites they must be someone with the relevant qualifications, training, or experience in ecological fields to enable them to identify habitats present on the site and the management requirements for them. They will use the statutory biodiversity metric to measure how many biodiversity units the site has pre-development, how many will be required to make up the units that will be lost from the development, and how many are needed to achieve the 10% BNG. This informs developers as to how many off-site units are needed and to formulate a BNG plan to submit to the Local Planning Authority (LPA) who will review it and decide whether to grant planning permission and/or set planning conditions. If a competent person has not been used or the BNG plan is insufficient the LPA may reject the planning application.

The latest statutory metric tool from when the BNG became mandatory must be used, (i.e., not version 4.0 or before), otherwise the calculations will be inaccurate. Natural England has announced their commitment to collaborate with stakeholders and interested parties to improve the existing biodiversity metric. They will provide guidance to the government on potential improvements with updates to the metric anticipated every 3-5 years. Therefore, land managers and developers must keep informed on any future updates to ensure they use the correct metric.

Developers must then follow the biodiversity hierarchy (see above) to ensure they achieve a 10% net gain on the biodiversity of their development.

further information

If you have any questions about any of the issues covered in this blog, please contact Daniel Clyne  in our Real Estate & Construction team or Kathaleen Anderson in our Family and Divorce team.

about the authors

Daniel is a Partner in our Real Estate team. He advises clients on commercial real estate transactions with experience acting on acquisitions, disposals, asset management, pre-lets and lettings, financings and developments.

Kathaleen is a trainee solicitor at Kingsley Napley and is currently in her second seat in the Family Team. She spent her first seat in the Real Estate Team, where she assisted with commercial and residential transactions.