After a long wait, on the evening of 15th April, DEFRA finally released the results of last May’s consultation on BNG. We set out our brief summary (more to follow) and Hugh Townsend’s initial thoughts about the impact of these changes on the market.
“As predicted, the BNG market is reinforced and BNG is politically further embedded following the result of this consultation, with some very positive and dynamic changes.”
NSIPs – A massive increase in demand
- Mandatory BNG for NSIPs will apply from the 2nd November 2026 for all sectors and types of projects.
- NSIPs will operate under the existing BNG framework.
- And NSIPs will be able to source BNG from any LNRS the project passes through without any spatial penalty.
“This is already starting to impact the market and developers need to factor this in and when to secure current unit prices.”
Spatial Risk Multiplier –Increase in the national market compared with local markets
- The spatial risk multiplier for LPAs and NCAs will be abolished and will instead apply based on Local Nature Recovery Strategy (LNRS) areas.
- This is a move from local markets in 337 LPAs and 159 NCAs, to 48 LNRS areas.
“This will increase the need not to only look at selling or buying in the same spatial weighting area. BNG is more than ever now a national market. There will be winners and losers through with this significant change”
A few of the exemptions and further changes
- BNG hierarchy to be relaxed for minor developments (1-9 houses) from 31st July. Offsite mitigation will be considered alongside onsite mitigation as the first-choice option.
- Self-build BNG exemption to be removed from 31st July.
- Sites under 0.2 ha will be exempted from BNG from 31st July. This could have been worse. Last year’s consultation considered exempting all sites <0.5 ha or even all minor developments. In spite of this, DEFRA still estimate that this exemption will reduce demand for offsite BNG units by around 10%, although caveat that this figure comes with a high level of uncertainty. Their calculations are based on a sample of approved residential planning applications from the 18 months following February 2024 – never a reliable approach when considering how unrepresentative the first few months of any such a scheme would be. Additionally, with the confirmation of NSIPs, the future increase in demand should massively outweigh this 10% loss without even considering the increasing demand from new housing etc. as the “hiatus” of planning permissions since February 2024 comes to an end.
- There is a new consultation on brownfield residential development, with a potential exemption for 0.5 – 2.5 ha brownfield sites and changes to the rules surrounding Open Mosaic Habitat (OMH). This includes the potential use of a proxy habitat or possibly introducing a new medium distinctiveness OMH equivalent habitat type. The closing date for this consultation is 10th June.
“It is important to remember that the 31st July date is subject to parliamentary scheduling, as are most of the other changes. A lot of developers will not be prepared to wait with that type of uncertainly.
The market price has already discounted for the lower demand due to the 0.2 ha exemption, evidenced by the continuing increase in enquiries month-on-month compared with last year – a 233% increase. DEFRA’s analysis of the 0.2 ha exemption comes with a high level of uncertainty and its significance is questionable in light of the increase in demand expected with NSIPs coming on stream.
Whatever negative affect there will be on demand with these changes, the best news is that the Government are doubling down on applying the full BNG framework to NSIPs, with the massive increase in demand this will bring, also spreading further afield from the projects, with spatial weighting not being applied on a sectional basis for each LNRS area the project passes through. Although delayed from the original launch date of November 2025 the increase in demand cannot be underestimated nationwide. Further guidance and secondary legislation is due in May. DEFRA will be balancing anything reducing demand for units with the need to maintain a healthy market as without this there will be no BNG scheme as it is.
Not only the relaxation of the hierarchy for minor sites but also the new LNRS spatial weighted areas suggests the debate of where to place habitat – onsite or offsite - is swinging in favour of nature first. Humans do not always mix well with nature. This bodes well for an increase in demand for offsite units.”