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Almost six years after Michael Gove as environment secretary first promised to make protecting the natural world go 鈥渉and in hand鈥� with building more homes, the government鈥檚 compulsory biodiversity net gain policy will finally be introduced later this month. Under this policy, all development projects will have to ensure that they generate an increase of at least a 10% in biodiversity, either on site or by off-setting.

At the time, Gove said that his biodiversity net gain (BNG) plan, which became enshrined in the 2021 Environment Act, put 鈥渢he environment at the heart of planning and development鈥�. Now as housing secretary, overseeing its roll-out across the sector, he says it will ensure that developers 鈥渆nrich local wildlife when delivering new homes and infrastructure鈥�.

Either way, it is hard to underplay its significance to the industry, potentially fundamentally affecting how developers design, landscape, value, manage and market their sites, and adding a big new layer of complexity into the planning process at a time when the system is already buckling under the strain of a resourcing crisis. 鈥淚t鈥檚 something that鈥檚 had a fundamental effect on the way we approach sites,鈥� says Neil Beamsley, group head of biodiversity at listed builder Bellway.

While the final details of the mandatory scheme have only just emerged, the biggest developers have largely been able to skill up, look ahead and do their best to adopt BNG ahead of the game. But huge questions remain over how it will work in practice, and the readiness of smaller developers and local authorities for its introduction. So, what will it mean for the sector?

鈥淗ugely positive鈥�

The principle of BNG is straightforward 鈥� to leave a site with better biodiversity after a development than before. Some local authorities have had policies requiring biodiversity net gain 鈥� or at least no net loss 鈥� for a few years, and some developers that have experience of that, and have positively adopted net-gain strategies, have said it can produce benefits at little cost.

Listed London-based giant Berkeley Group, for example, an early adopter of BNG which claims to have delivered net gain on 54 projects, says it successfully uses images of its biodiverse landscaping in the front and centre of its marketing efforts to drive buyer interest. Louise Clarke, group head of sustainability for Berkeley, says: 鈥淎s long as you think about biodiversity early in the process, it shouldn鈥檛 really cost you more 鈥� you need to think of it as part of your design and landscaping. And, in planning terms, offering net gain is seen as hugely positive.鈥�

Developers like Berkeley and Bellway, with the resource to employ in-house specialists and ecologists, have developed processes to ensure net gain is considered even at the point of buying land. Beamsley says he signs off on the net gain assessments made on behalf of Bellway鈥檚 land teams before purchase or option agreements are signed, to ensure that no offsite credits will be required.

Rachel Danemann, who as a planning manager at the Home Builders Federation (HBF) has been leading on the BNG policy for the trade body, says the 鈥渂igger builders鈥� are 鈥渇airly comfortable with BNG鈥�.

Clearly, therefore, there is the potential for Gove鈥檚 vaunted win-win here, as net gain done properly could make a substantial difference to habitat loss. Ben Kite, MD of environmental consultancy EPR, which works with local authorities, landowners and developers, says there is a prospect for it to be a vehicle through which councils can fund improvements they want to make in the environment, if they do work up front to identify and allocate strategically located sites for habitat banks in local plans and local nature recovery strategies.

鈥淚鈥檓 in favour of trying to deliver biodiversity on site,鈥� he says. 鈥淏ut, where you can鈥檛, the opportunity is to make councils鈥� nature recovery strategies, which otherwise might sit on a shelf, something that developers can fund when they buy BNG credits.鈥�

Too much too soon

But, as Kite鈥檚 comment indicates, the straightforward desired outcome of improving biodiversity belies huge complexity in the detail of the scheme design (see: How will BNG work). And it is that complexity, rather than the principle of it, which is causing some major concerns.

Chris Carr, MD of Cleethorpes-based SME developer Carr & Carr Builders and national president of the Federation of Master Builders, says the reams of regulation combined with a lack of preparedness at local authorities mean that it will be impossible for smaller firms to manage. 鈥淚t鈥檚 too much, too soon and it鈥檚 too complex,鈥� he says.

The HBF鈥檚 Danemann says that, while some firms are undoubtedly getting totally behind net gain, 鈥渟ome fear it could still become a nightmare. We need to ensure the guidance and local authority resource are in place.鈥�

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Rico Wojtulewicz, head of policy at the House Builders Association (HBA), an offshoot of the National Federation of Builders which represents SME developers, says his organisation was an early supporter of net gain when it was first discussed over a decade ago 鈥� on the basis that it was brought forward in a way that small firms could cope with. But he says this has proved to be anything but the case.

An HBA policy document he produced last year said: 鈥淥ur only caution throughout the process was that it did not turn into an offsite tax harming SMEs [鈥�] Unfortunately, our worst fears have been realised.鈥�

Wojtulewicz adds: 鈥淚t鈥檚 the only time I feel guilty for the work I鈥檝e done for my members. We tried to do the right thing, but BNG has been developed in a way that鈥檚 completely perverse, and our members are going to be really badly hit.鈥�

Sites of fewer than 10 units will at least benefit from a delayed introduction to the scheme 鈥� to April 24 鈥� and be able to use a simplified metric, but Wojtulewicz says this will not be a significant assistance, helping only the very smallest firms.

Prohibitive

For SMEs, concerns remain over viability and deliverability. Despite Clarke鈥檚 assertion that delivering net gain need not cost much, the testimony emerging from experience is that costs are wildly variable, and particularly dependent upon whether net gain can be generated on site or not.

Bellway鈥檚 Beamsley says the cost impact is very variable 鈥渙n a case by case basis鈥�, and that while 鈥渁 significant proportion鈥� are within viability, there are a minority of sites where costs can be 鈥渕ore prohibitive鈥�.

He adds: 鈥淚t鈥檚 only going to be a small number of cases. But most challenging are going to be small sites that have a decent existing biodiversity value, where you鈥檒l inevitably lose a lot in the development. With bigger sites, you have more luxury in getting that back.鈥�

Nuala Wheatley, senior planner at planning consultant Lichfields, says: 鈥淐ost impacts will depend on a case-by-case basis on the value of habitat existing on a site, and the space within the site.鈥� On some sites, for example, she said that builders may need to acquire more land or have to reduce the available developable area.

It is unsurprising, therefore, that SMEs, which work predominantly on smaller sites, are more worried about these costs, particularly as they fear that it will not be easy to access the market for off-site credits.

Brokers are marketing off-site credits at an expensive 拢20,000-拢30,000 per biodiversity unit (BDU), says the HBF鈥檚 Danemann, but availability is patchy and, says Bellway鈥檚 Beamsley, the market remains 鈥渧ery immature鈥�, with a likely 18 to 24 months before it is properly established.

More than that, the FMB鈥檚 Carr says, brokers are not keen to sell to SMEs because they are looking for chunkier deals 鈥� which might force small builders to rely on buying the backstop credits from the national habitat bank, at upwards of 拢60,000 per BDU. 鈥淔or small builders, the national bank might be their only resort,鈥� Carr says, therefore hitting viability.

Lichfield鈥檚 Wheatley says: 鈥淪hould developers need to buy statutory credits, then costs could be extremely high, with published indicative prices ranging from 拢42,000 for certain grassland and wetland areas up to 拢650,000 for lakes.鈥�

Added to this is the lack of a brownfield exemption, which Carr says could be particularly damaging, given that sites can often score highly on the habitat metric if they have been left derelict for some time 鈥� putting an even higher hurdle in front of getting tricky brownfield sites built out.

鈥淣et gain has totally wiped out the chances of developing one of our sites, Chapman鈥檚 Pond in Cleethorpes, for 300 homes which has been derelict and is now full of trees,鈥� he says. 鈥淲e could never ever make it viable now.

鈥淭he policy鈥檚 got to be wrong if you can make money on greenfield land, but you lose money on brownfield.鈥�

Delays

There are other issues. Occupying Danemann鈥檚 mind since the government dumped the final set of net gain guidance and regulations on the sector at the end of November, is whether the system is likely to cause huge delays in processing applications. This is because the government has made clear that developers must submit their biodiversity gain plans 鈥渘o earlier than the day after planning permission has been granted鈥�, with councils then having eight further weeks to consider them.

鈥淭his will hold up delivery if you can鈥檛 get this approved. It鈥檚 potentially building in an extra delay into the process in the context where local authorities are already short of staff,鈥� she says.

Neil Beamsley agrees: 鈥淚t鈥檚 very much a concern鈥�. Bellway is also worried about the lack of guidance of how to deal with phased developments, he adds.

More subtle than these big policy concerns, perhaps, are fears about how the policy will play with customers. After all, landscaping new housing developments with the wild flowers, long grasses, shrublands, ponds and woods that will score you highly under the metric might not be popular with customers looking for somewhere to have a barbecue or kick a football abouit with their family.

Berkeley鈥檚 Clarke says her experience gives her confidence that homebuyers 鈥渓ove鈥� the biodiverse landscaping designs once the purpose of it has been explained, particularly as Berkeley has been able to retain more traditional amenity space as well. 鈥淧eople have seen wildlife come back, like herons. We鈥檝e had no issues on sites 鈥� it鈥檚 very popular,鈥� she says.

>>See also: We cannot afford to ignore the biodiversity challenge

>>See also: Beware the new biodiversity burden for developers

Carr, however, about to embark on a major development in the village of Waltham, near Grimsby (see box, below), is less sure. 鈥淵ou plant a flower meadow and it鈥檚 nice for about six weeks a year,鈥� he says. 鈥淏ut, for the rest of the time, it鈥檚 shrubland, and it鈥檚 not going to look great and is likely to attract vermin. It does worry me because I think it will put people off.鈥�

Whether developers can balance the competing demands of customers, wildlife, regulation and the bottom line will only really become clear in the next few weeks and months.