Developers are sleepwalking into Biodiversity Net Gain regulation – its time to wake up

Author Roland Bull, Partner and Head of Rural Investment at Bidwells

While the development community was given a reprieve in November last year with the delay of new laws that will require them to further protect and conserve nature, there are still signs that up to a third of developers are unaware of the imminent regulation, and nearly a quarter don’t believe that it will affect them, according to Shawbrook Bank . 

The requirements, termed Biodiversity Net Gain, confirmed to come into effect form 12 February 2024 will mandate that all new major developments must be required to deliver a 10% uplift in biodiversity if they are to be allowed to pass through planning. At stake for developers who do not engage with Biodiversity Net Gain’s arrival, is significant investment risk.  

Developers are required to deliver biodiversity units that mean that there is a net improvement in the quality of the natural environment following their development. Simply put, any negative impacts from development for the natural environment must be more than compensated through the supply or purchase of habitats quantified as biodiversity units. The availability of units is highly variable across the country and some developers may struggle to identify suitable offset sites initially, depending on their location and the habitat types they require. 

Moreover, developers that need to meet agreed deadlines or gateways may find themselves at risk unless they have plans for putting adequate units in place. The fact that the legislation has not yet been implemented officially also poses a significant challenge as the final, ratified legislation documentation is not publicly available. Developers are only able to go off previous consultations and guidance to take them through the exact processes that they need to put in place. To minimise risk, it is critical that developers know that the sites they choose to secure biodiversity units from will adhere to the requirements. 

A further key implication is that developers will be strongly incentivised to do as much as they can on or near to the site of development.  They can either do this on-site, or in an area under the same planning authority or National Character Area as where the development is taking place. If this is not possible, then developers must move into another planning authority or National Character Area, with the number of biodiversity units needed to be secured increasing the further you move out. Ultimately, this is likely to entail a need for a greater habitat area, which is likely to come at a higher price. At present the limited supply of biodiversity units is a key challenge for developers and we may find units being secured further afield until the market fully establishes. To meet this demand, Bidwells’ Natural Capital team has been working on the development of BNG schemes across England. 

While upcoming BNG regulation undoubtedly presents a challenge to developers already struggling with rising material costs and increasingly squeezed local authority planning resources, it is also true that something needs to be done to tackle the long-term decline of the UK’s biodiversity; 43 percent of Britain’s bird species are faced with extinction.  

Moreover, landowners will be able to profit from creating biodiverse habitats to sell biodiversity units to meet developments’ off-site requirements. Local authorities as landowners, then, could be big beneficiaries of this opportunity. The recent deal by Cambridgeshire County Councilto sell 65 biodiversity units to Network Rail to facilitate the development of the Cambridge South station as part of a scheme established by Bidwells, is a case study of this. 

The Council-owned plot of arable land at Lower Valley Farm will be used to replace and extend habitat lost in the rail station development, providing significant contributions to ecological priorities and ensuring the delivery of habitat creation and enhancement cost-effectively by a credible and committed public body. 

Ultimately, the new regulation could be a positive thing if stakeholders are provided with sound advice and developers are equipped with proper knowledge and tools to safeguard and get development moving at a time of acute need.