Carter Jonas’ analysis of implementation, variation, and future challenges
A year after the initial implementation of biodiversity net gain (BNG) under the Environment Act 2021, national property consultancy Carter Jonas has published extensive research, Biodiversity Net Gain: Navigating the Evolving Market, exploring the impact of the change in the law on landowners, land managers, developers, local authorities and environmental organisations.
First introduced on 12 February 2024, the mandatory BNG policy requires that all new developments leave biodiversity in a measurably better state: by the statutory minimum requirement of 10% in most local planning authorities (LPAs).
Carter Jonas’ analysis of over 3,300 hectares of development sites across England finds the average habitat baseline value is 3.45 units per hectare. To achieve a 10% net gain on a typical 10-hectare site, developers must therefore enhance or create habitats to achieve at least 37.95 biodiversity units (BU).
The research also reveals that 54.7% of developments deliver BNG entirely on-site. Off-site solutions are either the developer’s own land bank, the purchase of biodiversity units from local or national landowners or third parties, or through the national statutory credit scheme as a last resort.
In this respect, the analysis shows considerable disparity across the country: the East and South East have established habitat banks, while other regions currently face shortages.
Variation exists not only between regional sites but also between different habitat types. However, the variation between greenfield and brownfield land is less than many anticipated. Greenfield sites have an average baseline of 3.60 BU/ha and brownfield sites 3.17 BU/ha.
Although the availability of biodiversity habitat banks is limited in some regions, the development industry’s response to the requirement for BNG has been demonstrably positive, with 69.4% of proposed schemes identifying BNG solutions at the point of submitting a planning application, despite BNG being a pre-commencement condition under the Environment Act.
Naturally, some challenges and potential for refinement have been identified during the first year. From a natural capital markets perspective, David Albrough (Joint National Lead of Carter Jonas’ Natural Capital Services Team based in Cambridge) comments, “The industry has been slowly getting to grips with mandatory BNG over the past year and there are a couple of key issues coming through. Firstly, the invisibility of demand to potential suppliers. Developers of all types are having real difficulty in predicting their likely demand. This means that it is not clear to the likely providers if there will be a market for the units they want to produce. Thus, in some cases, they are not committing to schemes.
“Secondly, this bias in the regulations towards on site mitigation is already causing problems, especially for smaller developers and developments. With the additional costs and risks being passed on to the owners of the houses which in turn will make them harder to sell, this risks making some developments unviable.
“To solve these problems, firstly developers can use the research we have carried out to give them an estimate of their likely demand. They can then take this information to the market and let the market work out how to deal with any fluctuations. Secondly, government needs to review the bias towards on-site BNG for small developments because in reality impacts are far better mitigated off-site. If we can get this right, we will be on the way towards a properly functioning market which is in all our interests.”
From a planning perspective, Richard Holliday, Associate in Carter Jonas’ Leeds office comments, “The take-up of BNG has been generally positive, with the majority of developers providing considerably in excess of the minimum requirement, perhaps due to other planning policy requirements or to err on the side of caution and avoid potentially costly repercussions if the final calculation falls short of 10%. However, if the government is successful in meeting its ambitious housing target of 1.5 million homes within five years, demand will increase exponentially. On-site, this may pose issues in relation to density and viability. Off-site, demand may well exceed supply, at least initially.”
The government is currently consulting on a national land use strategy, and resulting policy changes may impact BNG. Lucy George, a Senior Natural Capital Advisor in Carter Jonas’ Natural Capital Services Team in York comments, “We live on an island and as such, there always has been and will continue to be conflicting, and complementary, demands on land. Land is ultimately in finite supply. Any land use policy needs to make sure the markets for nature-based solutions, including BNG, sit alongside economic growth and food security. Engaging in these evolving markets must be a strategic decision for landowners and habitat banking particularly should be viewed as a semi-permanent, if not permanent, land use change. It will be the right move for some but not all, and not only is the ecological capacity of land important, but property due diligence is critical as part of site selection.”
Another potential change is the national rollout of Local Nature Recovery Strategies (LNRS). This is expected to influence market dynamics significantly, with LNRS attracting premium biodiversity unit values. Additionally, the extension of BNG requirements to Nationally Significant Infrastructure Projects (NSIPs) in November 2025 will intensify competition for biodiversity units.
BNG policy will continue to evolve, impacting differently on housing and infrastructure developers, landowners, LPAs, and environmental stakeholders. Carter Jonas will continue to monitor change, advising on BNG at a strategic, tactical and technical level, brokering biodiversity units, and supporting clients in their understanding of the evolving regulatory landscape.