Biodiversity net gain becomes a requirement on developers

Improving biodiversity by at least 10% becomes a legal obligation on developers of housing, commercial and industrial sites from this week.

Planning applications submitted in England from 12 February must show that biodiversity net gain (BNG) associated with their projects will be achieved, either on- or off-site.

Providing all of the gain on-site will be a challenge in many cases, so there is a market for other landowners and occupiers to enter 30-year agreements to create the biodiversity needed.

See also: Biodiversity net gain: legal issues for farmers

The most common ways to do this are to sell biodiversity units through a broker – bringing an upfront payment – or through an operator, commonly with annual payments over the 30-year agreement, plus sums to the landowner for creating the units and managing the habitat.

Early indications

The market is at a very early stage and variable between regions, says Knight Frank partner Jamie Evans-Freke.

The South East in particular is well supplied with units, which means that values here have fallen, he says.

For example, a unit worth £30,000-£37,000 a year ago for arable reversion to wildflower meadow and some scrub is now more likely to be worth from £20,000 to £25,000, with a typical count of five to six units a hectare on low-grade arable ground and 1 to 1.5 units on existing grassland.

“The range is very region specific and local planning authority specific,” says Jamie.

“The fall in Basic Payment Scheme, together with the worst harvest for many years, is focusing the minds of many farmers on their lower-grade arable land and BNG is one option.

“It’s like a private stewardship agreement, but over 30 years instead of five, and paying considerably more than Country Stewardship and the Sustainable Farming Incentive.”

Carter Jonas partner Mark Russell launched 200-plus biodiversity units on 12 February.

These are in Cambridgeshire, but can also be associated with developments in Suffolk, Essex and Hertfordshire.

Values start at £22,500 a unit for arable reversion to neutral grassland, he says. “That’s the option for the farmer that most easily retains an agricultural use.

“Developers will be weighing up both the price and the quality of the units, as well as the track record of those committing to put them in place, their ability to manage the habitats, and achieve what they have committed to.

“They will also want to see that the funds to achieve this are secure.

“While there seem to be plenty of farmers and landowners willing to enter the market, it’s unclear yet just how big the market is.

“There’s still a lot of learning about how to use the Defra metric to determine how many units are needed for a development site.”

Holly Story, a director with North East land agent and adviser GSC Grays, says that there have been only a limited number of transactions so far, with developers seeking to mitigate on-site as much as possible.

“They have to demonstrate that they have tried to do the mitigation on-site. For industrial and commercial developments, that is more difficult,” says Holly.

“For landowners, BNG isn’t the golden goose, but there will be opportunities, especially where they are looking to enhance their natural capital or amenity value.”

Holly cautioned that farming developments which fall outside permitted development rights (PDRs) would need to meet their own BNG obligations, which would be far easier on-site than looking elsewhere.

So landowners should consider any plans for their own developments before offering off-site mitigation to others.