From January 2024, new housing developments, commercial buildings, and smaller infrastructure projects in England will need to include nature within their development plans. This is part of the new Biodiversity Net Gain (BNG) legislation, which requires developers to have a net-positive effect (of at least 10%) on biodiversity[1]. Major infrastructure projects will be required to do the same from 2025.

Developers will need to create or pay for new habitats and green spaces, either on-site or elsewhere in England. Habitats can include grasslands, hedgerows, lakes, woodlands, rivers, streams, wildflower meadows, green walls/roofs and ponds. The new legislation is key for England's plans to attract private finance into nature conservation and to meet the government’s targets.



How does it work?


Habitats and wildlife affected by development are given a biodiversity value using a government-created 'calculator'. The developer uses this tool to calculate the unit value for the  area they’re planning to build on and the unit value post-construction.  High-quality habitats in good condition receive a high-unit value, while less habitat-rich areas receive a lower-unit value. Developers must then ensure that at least a 10% improvement in biodiversity is planned, which can be done in three ways, detailed below. 

  • On-site
    Enhance biodiversity on the development site (see habitat examples above).
  • Buy 'units' from a growing 'net-gain market'
    Units are created from ecological improvements in other parts of England, which can be bought and sold. They must be like-for-like habitats, i.e., a wildlife pond for a wildlife pond. The net-gain market allows developers to buy units from landowners, habitat bank operators, brokers, trading platforms and some local planning authorities.
  • Statutory biodiversity credits

    These are bought from Natural England, and a last resort with purposely high prices. These are for situations where the damage can't be offset in other ways. (i.e., because it's a particularly rare habitat and/or no suitable credits are available on the net-gain market).

If developers plan to improve biodiversity off-site, the unit price will vary depending on its proximity to the development. The price increases the further away the off-site is from the development. Developers also need to submit a biodiversity action plan to the local authority.


Will it work?


While there are gaps we’d like to see addressed (detailed below), BNG is a positive step towards allocating finance to improve biodiversity. 

  • Governance gap

    On-site developments are likely to be unmonitored and unenforceable, leaving regulators little course of action if gains don't materialise. There’s a need for more clarity on how developments will be monitored over time and how non-compliance will be linked to fines.

  • Capacity gap
    Local authority funding cuts mean many don't have the in-house expertise for effective delivery. We’d like to see funding for BNG allocated to local authorities to ensure expertise and capacity. 
  • Credit gap
    Nature investments may not have scaled-up enough to meet the initial demand for statutory biodiversity credits. More support is needed for those investing in this nascent market. 

What are the investment risks and opportunities?


There will be an extra cost for developers, who are already struggling with difficult market conditions. And there is a financial requirement here. A unit on the net-gain market will cost around £25,000 and statutory credits range from £42,000 to £650,0002. The number and size of units/credits required for each development will vary and they are determined by the government’s calculator. Developers need to factor in these extra costs, including the regulatory compliance.

But we believe there are benefits too. While there is the option of buying units or credits, the BNG policy encourages developers to make the biodiversity gain as local as possible. Local planning authorities should identify areas that are suitable for habitat creation and enhancement. This would help to ensure that local biodiversity doesn’t suffer because of development. Improving nature on-site could make assets more attractive for buyers and renters, which also benefits developers. Supporting biodiversity could enhance the aesthetics of a development, support local climate change adaptation (like flood mitigation), and improve the health and wellbeing of occupiers. This has the potential to reduce void rates, enhance the value of an asset, and increase rents.


Landowners could also benefit from the new net-gain market by developing habitat banks – i.e., creating biodiversity units to sell. For example, they could convert low-productivity pasture into a wildflower meadow, which could then be sold on the net-gain market.


Importantly, the regulation provides an additional incentive to redevelop existing buildings and brownfield sites (previously developed areas). Unit values are likely to be lower for these assets/areas, given biodiversity has already been disturbed by previous developments. This ensures a greater density of buildings on existing sites, rather than sprawling into green areas.



What are we doing?


We've piloted projects with the Department for Environment, Food & Rural Affairs while they developed the regulation, providing feedback from live developments within our real estate funds. One pilot was a greenfield development, which converted intensive cattle pasture into a 62,000 square feet parcel delivery hub for a logistics tenant. While the trees and hedgerows were retained, there was extensive hardstanding (surfaced ground for vehicles) at the site, so the BNG couldn’t be achieved at ground level. The design therefore incorporated a green roof, which cost an extra £1.25 million, but avoided offsetting at even greater expense. The tenant also agreed to fund around 25% of the extra cost.



Final thoughts…


We see BNG as an opportunity for developers rather than simply a cost. Improving nature at developments should help to create more desirable sites. If it’s done well, the new BNG policy could have benefits for nature, developers and communities.

  1. UK Government, Understanding Biodiversity Net Gain, Published 21/02/2023, accessed 12/12/2023 (
  2. UK Government, Guidance – Statutory biodiversity credit prices, published on 27/07/2023, accessed 12/12,2023 (