While there is a glut of information in the form of government guidance on what BNG is and how developers go about securing it, there is perhaps less commentary on the cost of BNG in the context of transacting with land for development.
When identifying land for acquisition (that is not exempt from the national, 10% BNG requirement) regard must be had at the outset to the ecological value of the land and indeed BNG requirements should be a core component in site selection.
The 10% net gain requirement is secured by qualifying planning permissions being deemed to be subject to a pre-commencement condition requiring the approval of a biodiversity gain plan which demonstrates how the minimum 10% net gain improvement is achieved and how any habitat enhancement/creation identified in that plan will be maintained for at least 30 years.
Not every site will be able to secure a 10% gain onsite. The acquisition of credits in national credit schemes is discouraged by government guidance and the price of these biodiversity credits is reflective of that. Developers must then look outside their planning application boundary; whether at additional land holdings of their seller/landowner or some other third party to secure a "Receptor Site" to deliver all or part of the BNG requirement.
The sale and acquisition of biodiversity credits and securing maintenance of habitat within Receptor Sites takes a developer into a currently unregulated market of terms and pricing for biodiversity credits. Developers should be alive to these costs in the context of agreeing heads of terms (for example in pricing, planning deductibles and onerous conditions). A key to positioning oneself in a stronger bargaining position is understanding the biodiversity baseline value of the site.
Counter-intuitively the lower the ecological value of a site the better off you might be for a housing development. A brownfield site could enjoy a significant net gain as a result of residential development (sometimes well over 10%) because the planting of trees and provision of a green space/play area from a standing start of no greenery onsite could be a significant ecological gain.
A scheme's viability is not a basis for shrugging off BNG requirements and therefore developers are encouraged to gain an early understanding of BNG requirements and their impact on land and planning costs. In this way, BNG is not simply a planning consideration but very much a land one.
