Government rolls back biodiversity net gain on small sites to speed up housebuilding

Some of the government’s proposals include making it easier for developers, particularly SME builders, to build higher-density housing on smaller sites and under-used land where appropriate.

Standards on energy efficiency and BNG would be streamlined to give builders certainty on plans for new homes and new builds would include nature-friendly features such as swift bricks to support wildlife.

A new ‘medium site’ category, for sites between 10 to 49 homes, would also help SME builders face proportionate rules and costs for their site size.

These changes, the government has proposed, would effectively override conflicting policies from day one to ensure an immediate effect.

The government also said that it will introduce measures to make it easier, quicker and cheaper to deliver BNG offsite to benefit medium-sized developments.

A full consultation response and implementation timeline is expected to be published in the new year, alongside a consultation response on implementing BNG for nationally significant infrastructure projects, which will go live in May.

But these changes could impact housing associations cashing in on BNG rules by creating habitat banks and using the profits to lower residents’ service charges.

In summer 2024, the government wanted landowners to set up habitat banks to sell their BNG units to developers. Any biodiversity increases over 10% achieved on sites can also be turned into units and sold on.

At the time Neil Toner, senior consultant at law firm Devonshires, said: “There is no reason as large landowners, which many registered providers are, not to take advantage of the BNG market.”

Most large housing associations “clock the importance of biodiversity”, he said, but they do not acknowledge that it could become “an income stream” that could be used to benefit residents.

This is because selling BNG units would “as a minimum” cover the landlords’ costs of greening their estates, which they would have spent anyway as part of improvement and maintenance works in many cases.

Across the sector, there are “definitely millions” of pounds to be made from habitat banks, Mr Toner added.

Emma Toovey, chief nature officer at Environment Bank, a company that helps landowners to market BNG units, told Inside Housing: “BNG was introduced to ensure development contributes positively to biodiversity, rather than eroding it.

“Far from being a barrier to housebuilding or farming, BNG has unlocked new opportunities for landowners and developers to work together to restore nature.

“Our partners in the housing and agricultural sectors have embraced this approach, recognising that sustainable growth and environmental stewardship can go hand in hand. BNG is not just about nature; it is about growth, certainty and credibility.”

Polly Montoneri, partner – rural land and business at law firm Forsters, said: “The need to unlock smaller housing sites by rolling back BNG commitments should have been weighed better against the impact that the changes will have on the BNG and natural capital markets generally.

“Viability issues for smaller development sites could have been improved by allowing the market to evolve sufficiently to deliver fractional BNG units at lower cost, combined with other measures like the removal of the spatial multiplier for small sites.”

Robert Oates, chief executive officer of ecology consultancy Arbtech, said: “There will be widespread relief that the government has rowed back from a 0.5-ha exemption, which would have been catastrophic for the delivery of BNG and private sector investment in nature. Setting the threshold at 0.2 ha is a far more pragmatic compromise that strikes a better balance between avoiding unnecessary burdens on genuinely small sites while preserving the scale needed for BNG to function.”

He added that the government’s efforts to make offsite BNG easier should be “cautiously welcomed” by organisations creating habitat banks, including housing associations, as streamlined processes should help accelerate delivery, but the detail will be “crucial”.

“Ultimately BNG can still deliver meaningful gains for nature and unlock investment. But any more flip-flopping on the policy risks putting off those eager to invest in BNG, including housing associations, in the future. The government must proceed with caution on any further measures, or risk deterring all investment in nature going forward,” Mr Oates said.