Biodiversity Net Gain reforms – key changes for landowners

The Government has recently announced several amendments to Biodiversity Net Gain (BNG) policy and procedures which have the potential to increase demand for off-site delivery.

While the requirement to deliver a minimum 10% biodiversity uplift remains unchanged, the reforms suggest a shift towards a more flexible system, particularly for smaller development sites, and a reduced emphasis on on-site provision.

Outlined below are the key updates and how they may affect the off-site market for BNG units:

0.2 ha or less exemption

One of the headline changes is the introduction of a BNG exemption for sites of 0.2ha or below, with the aim of streamlining the process for minor applications and reducing costs and complexity. Previously, BNG could apply to developments of 25m2 or more.

The Government expects around 50% of residential planning permissions to fall outside of BNG requirements following this change. However, developments that affect Priority Habitats will still be subject to BNG. 

Demand for offsite BNG units is expected to fall by approximately 10% as a result. On the face of it, this does feels like a step backwards for the BNG market, introducing instability and uncertainty for habitat banks and landowners who are either active in the market or looking to enter it.

However, this segment of the market is predominantly made up of buyers with very small unit requirements and with relatively low unit values. The impact is therefore likely to be more limited than the headline figures suggest. The Government has also noted that the reduction in demand may be mitigated by future planning reforms – for example, BNG applying to Nationally Significant Infrastructure Projects (NSIPs) (see below) – and wider environmental legislation.

Extension to Nationally Significant Infrastructure Projects (NSIPs)

A significant milestone will also be the extension of BNG to Nationally Significant Infrastructure Projects (NSIPs) from November 2026 (although this is being introduced later than originally planned).

Despite the delay and lack of clarity to date, off-site unit providers will welcome the news that, as with minor developments, developers will be able to meet their requirements through off-site delivery, rather than following the existing hierarchy.

Unlike the current market – largely dominated by grassland units – NSIPs are also likely to require larger volumes and a broader range of habitat types.

We have already seen several major utility companies go to public tender for specific unit types, quantities and locations as these companies prepare for BNG.

Additional exemptions and changes

Alongside the revised 0.2ha threshold, further exemptions have been confirmed or are under consultation for:

• Temporary development with planning permissions for up to five years
• Development primarily for biodiversity conservation

The Government is planning to end the exemption for self builds and custom-build projects, but this is on the basis that they will likely fall under the 0.2ha threshold.

BNG hierarchy and easing for minor development

In addition, the Government intends to amend the BNG hierarchy for minor developments, allowing off-site units to be considered alongside on-site delivery.

This is a change from the current approach, where on-site provision is prioritised.

This could be a useful change for both developers and off-site unit providers. Reducing the requirement for on-site habitat enhancement and creation lowers developers’ long-term management obligations and, in some cases, will remove the need to scale back development to accommodate it.

Small site developers looking to purchase units from off-site providers are also likely to be working to shorter timescales than we are currently seeing for larger sites that can spend a significantly longer time going through the planning process.

Stakeholders within the environmental and BNG sector have been sceptical of how effective the ecological aspects of on-site delivery and management are in practice (see the report The Comparative Value of On-site vs Off-site Biodiversity Net Gain for Restoring Nature.)

This amendment could drive developers to invest in off-site projects which can be better placed to deliver long-term ecological enhancements and improvements.

The Government has indicated the changes should come into effect at the end of July 2026.

Spatial risk

Later this year it is also planned that spatial risk will start to be assessed on local nature recovery strategy (LNRS) areas, rather than local planning authority (LPA) and National Character Area boundaries as is currently the case.

This means developers will need to purchase off-site units located within the development’s LNRS area to avoid penalties.

While further amendments to the metric will cause some frustration, the direction of travel seem sensible. By aligning the metric to LNRS areas, it in turn aligns BNG delivery more closely with wider nature recovery priorities and the Nature Restoration Fund.

Off-site unit providers are advised to review the LNRS areas now to understand what changes may occur regarding their ‘target’ development areas. 

Brownfield consultation

Finally, the Government is also consulting on a whether to introduce a BNG exemption for residential brownfield development sites of up to 2.5ha.

The aim would be to make developing brownfield sites easier, although the consultation acknowledges this would significantly reduce transactions in the off-site market.

Strutt & Parker Services

The reforms point to a potential shift in the market for BNG, with the majority signalling a move more towards favouring off-site delivery.

Strutt & Parker’s team is uniquely placed to bridge the gap between developers, landowners and regulators in navigating this evolving market.

Our tailored BNG brokering service enables fair and transparent negotiations and compliant agreements between buyers and sellers of BNG units.

For further details, please contact James Oliver.