There was an overwhelming amount of interest in the first national sale of BNG last Friday with 107 tender packs requested before the deadline at 1pm and sales now being processed. We are now talking to many hundreds of developers and their advisers, and more units are wanted for the next tender on the 8th March.
It is notable how the amount of interest in buying units has “lifted off” following the announcement of the mandatory start date of 12th February (small sites 2nd April). There is no chance of further delays to the secondary legislation for the BNG framework which will apply to all English LPAs under the Environment Act. Combined with the new Statutory Metric, the revised NPPF in December and DEFRA’s latest guidance – there is no turning back.
It is still too early to predict what supply and demand will be going forward but, if the type of response on Friday continues, the demand could now be outstripping the current supply. Prices could well rise from the current range of £25,000 to £40,000 for common types of habitats. However there are many “moving plates” to this market with demand in different areas and the added effect of spatial weighting. However development sites in the middle of the larger conurbations only have the option of buying further afield and therefore will create extra demand in the more rural areas. The play between different types of habitat as to how they can been traded under the Metric rules is another unknown consequence. So often Government-created marketplaces do not behave as first intended as they come under the scrutiny of commercial interest.
It is possible we will look back and think of this as the start of the “open market” brokerage for mandatory BNG in all LPAs.
Vendors who can provide NN credits for phosphates or nitrates as a combined sale with BNG units from the same land is a very attractive package, popular for LPAs requiring both for a development, and can make the sale process for both easier and quicker. Some vendors already losing intensive agricultural use of their land for thirty years are a little more relaxed about the longer restrictions for NN if a combined sale can be agreed maximising the money made from the same land. Contact us if you would like an NN assessment to offer credits with your BNG units.
What has been revealing when talking to developers including a number of large-sized firms’ managing directors and the biggest house builders in the UK is that there is still a surprising lack of knowledge and some misunderstandings about how the BNG market works. Sadly, there has been some confusion and misleading approaches from a wide range of different BNG operators trying to sell their own models of creating and trading units in the voluntary market during the last couple of years. Some well intentioned and some plain greedy. This now, with the start of more traditional brokerage, is an increasingly transparent market where more freely accessible complete information, should start to resolve this for the benefit of both vendors and purchasers.