Biodiversity net gain
Under the Environment Act 2021, BNG became mandatory in England for most major developments from February 2024 and for most small sites from April 2024. The developer measures the site's habitat value using the statutory biodiversity metric, then shows how the scheme will deliver at least a 10% gain, secured for 30 years. There are exemptions, including householder applications and some very small or self-build schemes. The government has consulted on changes for minor and some brownfield development, so check the rules that apply when you apply for planning. See biodiversity net gain on gov.uk.
How BNG is delivered
- On-site: new or improved habitat within the development
- Off-site: habitat created or enhanced elsewhere, often bought as units from a habitat bank
- Statutory credits: a last resort bought from government, priced to discourage their use
On-site delivery uses land that could otherwise hold units. Off-site units and long-term management agreements cost money. Either way, BNG reduces the residual land value; see residual land value explained.
Nutrient neutrality
In catchments where protected habitats are affected by nitrogen or phosphorus, Natural England advises that new overnight accommodation, mainly homes, must be nutrient neutral. The developer calculates the extra nutrients from the new homes' wastewater and land use change, then offsets them, for example by buying nutrient credits, creating wetlands or upgrading drainage. Planning authorities in affected areas will not grant permission until mitigation is secured. Government reforms to how developers meet environmental obligations may change the approach in some areas over time.
Effect on appraisals and land value
- Add the cost of ecology surveys, the metric and any off-site units or nutrient credits
- Allow for land given over to on-site habitat, and long-term maintenance
- Build in time: mitigation must usually be secured before permission or commencement
- Reflect the cost in the land price, rather than absorbing it from your profit
Overlooking these costs is a common appraisal mistake; see development finance pros, cons and mistakes.
What lenders look at
Development lenders need the planning position to be secure before releasing build funds. They will check that BNG and nutrient conditions are discharged, or will be before work starts, and that the cost is in the budget. If you buy a site before mitigation is secured, a land finance or planning gain bridge may be needed. See do I need planning permission for development finance.
When the planning position is clear, compare development lenders on Instant Quotes and apply online.
Common questions
What is biodiversity net gain?
A planning requirement in England that most developments leave habitat measurably better than before, usually by at least 10%, secured for 30 years.
Does biodiversity net gain apply to small sites?
It has applied to most small sites since April 2024, with some exemptions. The government has consulted on changes for minor development, so check the current rules.
What is nutrient neutrality?
A requirement in certain catchments that new homes do not increase nitrogen or phosphorus reaching protected habitats, usually met by buying credits or providing mitigation.
Will a lender fund the cost of BNG or nutrient credits?
It can form part of the total costs in your appraisal, but lenders need the mitigation secured and the planning position clear before releasing build funds.
This guide is for general information only and should not be treated as legal, tax or financial advice. Lender requirements depend on the property and your circumstances.
