Biodiversity Net Gain: Costing the 10% Mandate

2 November 2025 · 9 min read · Sustainability

Biodiversity Net Gain (BNG) has moved from policy aspiration to binding legal requirement. Since November 2023, virtually all developments falling under the Town and Country Planning Act must deliver at least a 10% net gain in biodiversity, measured using the statutory biodiversity metric. For developers and landowners, this is not an environmental bolt-on — it is a cost, programme, and design constraint that must be priced and planned from the earliest project stages.

The BNG Framework: How It Works

The BNG regime operates through the Statutory Biodiversity Metric 4.0, a habitat-based scoring system that assigns biodiversity units to a site based on its habitat type, condition, distinctiveness, and strategic significance. The metric generates three types of units: area units (the primary measure), hedgerow units, and watercourse units. A development must demonstrate that post-development biodiversity, after avoidance and mitigation measures, exceeds pre-development baseline by at least 10%.

The calculation is performed by a qualified ecologist and submitted with the planning application. Once approved, the BNG gain is secured through a conservation covenant or planning obligation (Section 106 agreement), and the habitat must be maintained for a minimum of 30 years.

Delivery Hierarchy: On-Site, Off-Site, Credits

BNG follows a strict delivery hierarchy. Developers must explore options in the following order:

1. Avoid: minimise biodiversity loss through site layout and design
2. Mitigate: reduce remaining impacts through habitat enhancement within the site boundary
3. Compensate on-site: create or enhance habitats within the development site
4. Compensate off-site: deliver gains on land outside the development, either directly or through habitat banking
5. Statutory credits: purchase government-backed biodiversity credits as a last resort

The hierarchy is enforced through planning policy — local planning authorities expect applicants to demonstrate that higher-tier options have been genuinely considered before lower-tier options are accepted.

"Statutory biodiversity credits are explicitly priced to be more expensive than market alternatives. They are designed as a last resort, not a convenient offset — and LPAs will scrutinise any application that relies on credits without evidence of on-site and off-site exploration."

Costing the Options

Each delivery route carries a distinct cost profile that must be built into the development appraisal:

On-site delivery: Creating habitats within the site boundary is often the most cost-effective route per unit, but it consumes developable land. On a tight urban site, the opportunity cost of land allocated to BNG can be significant. On-site habitats also require a 30-year management plan, which should be costed as a commuted sum in the S106 agreement — typically £15,000–£35,000 per hectare depending on habitat type.

Off-site delivery: Purchasing biodiversity units from a habitat bank or neighbouring landowner is increasingly common. Market prices for area units range from £12,000 to £25,000 per unit depending on location, habitat type, and scarcity. Off-site units must be delivered in the same local authority area (or an adjacent one, with justification), and must be secured before planning permission is granted.

Statutory credits: At £42,000 per area unit, statutory credits are the most expensive option by design. They are intended to be used only where on-site and off-site options are genuinely unavailable. The revenue funds national strategic habitat creation.

Cost Planning Implications

BNG has several layers of cost impact that must be captured in development appraisals:

• Baseline survey costs: Phase 1 habitat surveys and metric calculations, typically £3,000–£8,000 per site
• Habitat creation and enhancement: capital cost of landscaping, planting, and habitat construction
• Unit purchase costs: off-site units or statutory credits where required
• Long-term management: 30-year management plans, monitoring, and reporting obligations
• Professional fees: ecological consultancy, legal costs for S106/conservation covenants, and monitoring arrangements
• Land opportunity cost: the value of developable land lost to BNG habitat areas

On a typical residential development of 200 units on a greenfield site, total BNG costs — including habitat creation, management plans, and professional fees — can range from £150,000 to over £800,000, depending on the baseline habitat quality, the percentage of on-site delivery, and the availability of off-site units locally.

Schedule 3 and Small Sites

Since April 2024, mandatory BNG has applied to small sites (fewer than 10 residential units or sites under 0.5 hectares). Small site developers can use the Small Sites Metric (SSM), a simplified version of the statutory metric that does not require a qualified ecologist — though professional input is advisable for anything beyond the most straightforward sites. The cost dynamics on small sites can be disproportionately high because the fixed costs of baseline surveying and management planning are spread across fewer units.

Practical Steps Now

1. Commission the baseline survey early: the Phase 1 habitat survey and BNG metric should be commissioned at the same time as the topographical survey — before the layout is fixed
2. Integrate BNG into the design: treat the BNG requirement as a design constraint from concept stage, not a post-planning condition
3. Model the cost options: prepare a comparative cost appraisal of on-site, off-site, and credit delivery routes at RIBA Stage 2
4. Engage the LPA early: pre-application discussions on BNG strategy can avoid costly redesigns at the determination stage
5. Secure off-site units promptly: habitat bank availability is limited and competitive — secure units through a binding agreement before submitting the application
6. Cost the management plan realistically: the 30-year management obligation is a real cost — obtain quotes from habitat management specialists and build the commuted sum into the S106 negotiation

Sources: Environment Act 2021; Statutory Biodiversity Metric 4.0 (Natural England, 2023); Biodiversity Gain Requirements (Town and Country Planning) Regulations 2024; DEFRA, Biodiversity Net Gain Market Analysis (2024); Natural England, Statutory Credit Price Review (2024); RICS Guidance Note on Environmental Cost Assessment (2023); market data from habitat bank providers.