Alongside the legal obligations, you will need to consider the commercial practicalities of a new, opaque and fast moving market. We are here to help landowners navigate the complexities of developing a BNG scheme

Alongside the legal obligations, you will need to consider the commercial practicalities of a new, opaque and fast moving market. We are here to help landowners navigate the complexities of developing a BNG scheme. 

Routes to market

For a landowner, there are three routes to market.  

  1. Creating a Habitat bank
  2. Built to order
  3. Off-market sales 

Each route to market has costs and benefits, the real impact of these will only be determined as the market develops.  

Habitat bank

Creating a Habitat Bank is likely to be the most common method of bringing a scheme to market. This requires a landowner to secure the land for BNG using a Section 106 Agreement or Conservation Covenant before the sale of units. 


  • Least risk for developers so maximum value from sales 
  • Can participate in the ‘spot market’ as units already exist 
  • The costs of deploying the scheme are spread over a fixed number of units
  • Legal agreements can be made to ensure sales of units crystalise the 30-year agreement 
  • Depending on when the habitat was created, the temporal risk multiplier can improve the commercials 


  • Full ownership of the delivery risk 
  • Costs to secure the scheme are due before the revenue
  • Market risks if prices drop
  • There is no statutory requirement for the LPA to review the scheme   

Built to order 

Developers may require some quite specific habitat types. Landowners have the option to build these as they are required. This can be done either by changing the habitats once the land is already in an existing BNG scheme, by creating a new scheme or by extending an existing agreement.  Typically if an existing scheme is already in place, the process of variation will be quicker and easier, and therefore more attractive to a time-constrained developer.   As a landowner, you will likely still hold the risk to ensure the habitats are created, unless this is agreed separately. 


  • Medium risk for developers so less than optimal value from sales 
  • Can service developers with non-urgent time scales 
  • Potential to negotiate some value prior to deployment costs 
  • Land is not committed until the sales are made


  • Less revenue per unit than habitat-banked units
  • Maximum temporal risk multiplier 
  • Likely full ownership of delivery risk 
  • Potential for use of the statutory requirement for the LPA to review the scheme as it will be connected to a development   

Off-market sales 

Developers can agree off-market agreements with landowners.  Typically these will be done at a significant discount to on-market agreements. Depending on the developer, they may also be willing to assume more of the delivery risk. 


  • Minimum delivery risk for landowners (depending on the terms agreed) 
  • Developer can cover all costs with no payments required for landowner 
  • Can service developers with non-urgent time scales 
  • Land is not committed until the sales are made


  • Minimal value from sales 
  • Maximum temporal risk multiplier 
  • Potential unbudgetted liability if the developer goes into administration 

Is there a minimum size for BNG scheme? 

There is no legal minimum size for a BNG scheme, however, there are practical and governance reasons why larger schemes are more favourable. Firstly, there is general agreement that natural habitats have a greater impact and are more robust when they are larger. Known as the Lawton Principles from a 2010 review by Sir John Lawton, this has shaped thinking on how BNG should be delivered at both national and local levels. This could mean linking to other areas of natural habitat or being of significant size on its own.

When councils are looking at schemes, they are likely to discourage smaller sites, either by prioritising larger sites for review or through the commercial requirements of providing the Section 106 Agreement.  There is a friction here, that we expect to play out differently in different LPAs, where developing a BNG scheme should be available to small landowners but is discouraged by the LPA.

There is also the cost implications of developing a scheme on a smaller scale.  The price per unit will be higher and this may impact on viability if market prices drop. We are reviewing sites as small as 10 hectares as we feel the unit economics work at this level. On smaller plots, it may be better to do an off-market sale directly to a developer, with them owning some or all of the delivery risk.    

What sorts of habitats can I create? 

There is no hard and fast rules about what sorts of habitats you can create. The habitats should be sympathetic to the local environment, both from a biodiversity point of view and a practical perspective. The creation of habitats which do not suit the local environment will undoubtedly be more expensive to develop, take longer and have a greater risk of failure.

Should I aim for high distinctiveness excellent-quality units?

There is a danger of committing to unattainable goals. While we would all like to ensure the greatest possible impact for the environment, if you try to commit to standards which are not practical given your setting, you have a greater chance of falling foul of your legal commitments which can have a very significant impact on costs.

Can I combine BNG with other environmental land management schemes?

You cannot sell biodiversity units or combine them with other environmental payments when you’re already required to create or enhance habitat for: 

  • restocking trees 
  • Marine licensing 
  • remediation under the environmental damage regulations  
  • Sustainable Farming Incentive (SFI)
  • Countryside Stewardship (CS)
  • Environmental Stewardship (ES)
  • Landscape Recovery (LR)

Ensure that the enhancements for these schemes do not overlap with those for BNG or nutrient mitigation unless clearly distinguished.

Selling biodiversity units on protected sites 

You may be able to enhance a protected site and sell the units for BNG. You must get consent from Natural England before you start work and renew consent as required. 

You must ensure that any protected species licences required are in place before works commence.

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If you are considering a BNG or nutrient scheme, get in touch to understand how to ensure maximum benefit from your scheme.
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Where can you sell BNG Units? 

The Proximity Principle

Biodiversity Net Gain (BNG) adheres to the proximity principle, emphasising local enhancement. If on-site BNG is not achievable after consulting the mitigation hierarchy, priority should be given to nearby off-site opportunities. Statutory credits are only to be purchased as a last resort. The BNG metric imposes penalties on proposals where off-site habitats are distant from the impact site, ensuring the preservation of local biodiversity and the recognition of ecosystem services' importance to the local community.

A spatial risk multiplier is applied to off-site habitats located outside the Local Planning Authority area or the same National Character Area (or Marine Plan Area for inter-tidal habitats). For rivers and streams, boundaries set by the Water Framework Directive (WFD) water bodies and catchments are used. This multiplier is applied once, based on the larger of the two designations in which the off-site enhancement is located, typically the National Character Area. If the off-site enhancement lies within a neighbouring local planning authority but within the same National Character Area, the relevant National Character Area multiplier is used.

Spatial Risk Multiplier

The Biodiversity Metric incentivises habitat delivery on or near the development site through a 'Spatial Risk Multiplier,' which reduces the biodiversity value of habitats delivered further from the development area.

Depending on the location, developers may need to provide 1x, 1.5x, or 2x the biodiversity units to compensate. The requirement is 1x if located within the development’s local planning authority or national character area, 1.5x in an adjoining local planning authority or national character area, and 2x if situated elsewhere in England. This mechanism promotes local nature recovery and, if local delivery is not feasible, ensures significantly higher biodiversity compensation further from the development site.



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What is a National Character Area (NCA)


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