TLDR – Quick Answer
BNG credits are government-sold biodiversity units that developers must purchase as a last resort when they cannot achieve the mandatory 10% biodiversity net gain through on-site or off-site habitat creation. The biodiversity credits scheme allows the UK government to sell biodiversity credits to developers if the required biodiversity net gains cannot be achieved on-site or through the off-site market.
Key Facts:
- Cost: Starting at £42,000 per credit for common habitats, up to £650,000 for rare habitats
- Ratio: You must buy 2 statutory credits for every 1 biodiversity unit you need to compensate for
- When Required: BNG became mandatory on 12 February 2024 for large TCPA developments and on 2 April 2024 for small sites
- Minimum Purchase: The minimum number of statutory credits which can be purchased for a single development is 0.01
Table of Contents
What Are BNG Credits?
Biodiversity Net Gain (BNG) credits, officially known as “statutory biodiversity credits,” are a government mechanism designed to ensure that all new developments in England achieve a measurable positive impact on biodiversity. BNG makes sure development has a measurably positive impact (‘net gain’) on biodiversity, compared to what was there before development.
BNG credits serve as the final safety net in England’s three-tier approach to achieving biodiversity improvements. When developers cannot meet the mandatory 10% biodiversity net gain requirement through other means, they must purchase these credits from the government.
How BNG Credits Work: The Three-Tier System
Developers must deliver at least 10% BNG, either on-site or off-site, or as a last resort by buying statutory biodiversity credits. The system operates in a hierarchical order:
1. On-Site Biodiversity Enhancement (First Priority)
Developers first attempt to create or enhance habitats directly on the development site. This might involve planting native trees, creating wildflower meadows, or establishing pond systems.
2. Off-Site Biodiversity Projects (Second Option)
When on-site solutions are insufficient, developers can invest in biodiversity improvements elsewhere, typically through habitat banks or conservation projects in the local area.
3. Statutory BNG Credits (Last Resort)
The price of biodiversity credits are set higher than prices for equivalent biodiversity gain specifically to encourage developers to pursue the first two options before resorting to credit purchases.
BNG Credits Pricing Structure
The government has established a comprehensive pricing framework for statutory biodiversity credits, reflecting the ecological value and rarity of different habitat types.
Habitat-Based Pricing
Common Habitats:
- Starting price: £42,000 per credit for more common habitat types
Rare and Valuable Habitats:
- Up to £650,000 per credit for the most ecologically valuable and rare habitats
Linear Habitats (Special Categories):
- Hedgerow credit: £44,000
- Watercourse credit (rivers and streams): £230,000
The Spatial Risk Multiplier
One of the most important aspects of BNG credits is the spatial risk multiplier (SRM). The SRM applies to statutory credits to ensure they do not compete with the development of the off-site market and remain a last resort.
This multiplier means that two credits need to be purchased for every biodiversity unit – so, however many biodiversity units are needed, the statutory credit requirement doubles the effective cost and reinforces the government’s preference for on-site and off-site solutions.
When Are BNG Credits Required?
Legal Timeline
BNG requires that new developments secure a net 10% gain in biodiversity, as quantified by a statutory biodiversity metric, between the pre and post development baseline. The requirements became mandatory in phases:
- 12 February 2024: Large developments under the Town and Country Planning Act (TCPA)
- 2 April 2024: Small development sites
Development Types Covered
BNG credits apply to most new developments in England, with developers required to demonstrate how they will achieve the 10% biodiversity improvement through detailed ecological assessments and biodiversity unit calculations.
How Biodiversity Units Are Calculated
On the development site, patches of differing vegetation types, such as woodland, are mapped. Data on their size, ecology and location are used to derive ‘biodiversity units’. This systematic approach ensures that biodiversity loss is accurately quantified and appropriately compensated.
The statutory biodiversity metric considers multiple factors:
- Habitat type and distinctiveness
- Habitat condition
- Strategic significance
- Connectivity to other habitats
- Temporal factors (time to reach target condition)
Credit Purchase Process and Limitations
Non-Transferable Nature
Credits are linked to specific planning applications and are non-transferable and non-refundable as set out in the terms and conditions of sale. This ensures that credits are used for their intended purpose and cannot be traded as commodities.
Minimum Purchase Requirements
The government has set practical minimum thresholds to make the system workable for small developments while maintaining administrative efficiency.
Government Revenue
The total payment received for statutory credits was £206,180 from the introduction through the reporting period, indicating that most developers are successfully achieving BNG through on-site and off-site methods rather than relying on statutory credits.
Strategic Implications for Developers
Cost Planning
The high cost of statutory credits serves as a strong financial incentive for developers to:
- Incorporate biodiversity considerations early in the design process
- Explore creative on-site habitat solutions
- Invest in local off-site biodiversity projects
- Partner with habitat banks and conservation organizations
Design Integration
Understanding BNG credit costs helps developers make informed decisions about site layout, landscaping, and environmental features that could reduce or eliminate the need for statutory credits.
Future Outlook and Market Development
The BNG credits system is designed to stimulate a broader market for biodiversity improvements. By setting statutory credits as an expensive last resort, the government aims to encourage:
- Development of commercial habitat banks
- Innovation in on-site biodiversity solutions
- Long-term partnerships between developers and conservation organizations
- Investment in landscape-scale conservation projects
Calculating Your BNG Credit Requirements
Use this service to estimate the cost of statutory biodiversity credits for a development. The government provides online tools to help developers understand their potential credit requirements before committing to development projects.
The statutory biodiversity metric tool will automatically calculate the number of credits required based on the specific ecological characteristics of each development site.
Key Takeaways for Property Developers
- Early Planning is Essential: Incorporate biodiversity considerations from the earliest design stages to minimize credit requirements
- Explore All Options: Thoroughly investigate on-site and off-site alternatives before considering statutory credits
- Budget Appropriately: Factor potential credit costs into financial planning, remembering the 2:1 ratio requirement
- Seek Expert Advice: Work with qualified ecologists and BNG specialists to optimize biodiversity outcomes
- Long-term Perspective: View BNG as an opportunity to create lasting environmental benefits rather than just a regulatory burden
BNG credits represent a significant shift toward making biodiversity improvement a standard part of the development process in England. While the costs may seem substantial, they reflect the true value of ecosystem services and the government’s commitment to achieving measurable environmental improvements through the planning system.
The success of this system will ultimately be measured not by how many credits are sold, but by how effectively it drives innovation and investment in biodiversity conservation across England’s landscapes.
Disclaimer: This article on BNG credits was correct at the time of writing and reflects the most current information available. Given the evolving nature of biodiversity net gain regulations and government policy, this content will be updated from time to time to maintain accuracy. For the latest property development opportunities and land listings that may be suitable for BNG projects, visit Landlistings.co.uk. Always consult with qualified ecological and legal professionals for specific project guidance.
Comments