Biodiversity Net Gain: A welcome shift for SME developers

A recent government announcement has offered a lifeline for smaller developers, whose hands have been tied by BNG regulations…

The government has announced a significant change in how Biodiversity Net Gain (BNG) will apply to small development sites, confirming that schemes below 0.2 hectares will be exempt from the requirement to deliver a minimum 10% uplift in biodiversity. However, the new exemption requires secondary legislation to be fully enacted, meaning current applications are still subject to the existing BNG rules.

For many SME developers, this represents a welcome adjustment to a policy that, while well intentioned, has proved difficult to implement on smaller schemes.

BNG Challenges

Since BNG became a statutory requirement in 2024, developers have been required to demonstrate biodiversity enhancement either on site or through off-site mitigation. While early evidence suggests the system is working effectively for larger developments, the Department for Environment, Food and Rural Affairs (DEFRA) has acknowledged that smaller schemes – particularly those on brownfield land – are finding BNG more challenging and disproportionately expensive to deliver.

Paul Smith at Apex Planning Consultants believes this is an issue that has been some time coming. “In my opinion, relaxing the rules for SME-type developers in respect of small development sites will be hugely advantageous. I am finding that some still do not fully appreciate the implications of BNG, both in terms of the work that needs to be completed to support and justify a planning application, and then the cost of mitigating ‘harm’ or loss of biodiversity and enhancing the baseline value by at least 10%.”

For small sites, achieving BNG on site is often unrealistic due to space constraints. As Paul explains, “Many such developers try to provide BNG on site, however with small sites it is just not feasible to achieve the requisite mitigation and enhancement, so purchasing off-site credits is the only other option.” This, however, can create further problems, as these credits can be expensive to purchase, and add to already high development costs.

The issue is compounded by variations in how local planning authorities manage off-site BNG. Paul notes that “different councils apply different rules: some require the purchase of the off-site credits to be controlled via a S.106 legal agreement, whereas others are more pragmatic and are willing to control and monitor the purchase by imposing a planning condition.” In his view, exempting small sites from BNG requirements could be hugely beneficial to the viability of SME developers.

DEFRA

DEFRA has confirmed that the exemption for sites below 0.2 hectares is intended to reduce costs for SME developers while also saving time and resources for local planning authorities. The announcement follows a consultation on improving BNG for minor, medium and brownfield development.

The department has also stated that it will consult on a further targeted exemption for brownfield residential development, potentially covering sites of up to 2.5 hectares, depending on how brownfield land is defined. DEFRA has said this approach would support housing delivery on land of lower ecological value while maintaining strong BNG outcomes elsewhere.

There remains, however, a wider debate about the role of small sites in the natural environment. Paul acknowledges this tension: “There is also an argument that says this should be deemed acceptable anyway, because small sites with habitat might offer little ecological and habitat value, so their loss to development is not significant.” At the same time, he recognises the counter-argument: “Small sites contribute to the natural environment of those people living nearby… and it means wildlife is forced to congregate in fewer albeit large locations, clustered together, rather than naturally spreading themselves across the country.”

Ultimately, Paul suggests that policy balance is driving the government’s position. “It is arguably a conundrum, however, it seems the government’s opinion is that on balance the benefit of exempting small sites to more easily gain more housing, while still allowing for BNG on larger development sites, is worthwhile.”

Alongside the exemption, DEFRA has committed to making off-site BNG delivery “easier, quicker and cheaper”, with further details expected, including a full consultation response and implementation timeline. Until changes are formally introduced, developers are advised to continue complying with existing BNG legislation.

While BNG will remain a statutory and central part of planning policy, the exemption for small sites signals a more proportionate and flexible approach – one that recognises the realities faced by SME developers while continuing to support the government’s wider environmental ambitions.

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