In a significant development for the property industry, the Labour government is currently reviewing the Biodiversity Net Gain (BNG) requirements that have posed challenges for smaller housebuilders across England.
These proposals, part of a formal consultation launched in May 2025, form one element of a wider package of housing reforms and could provide vital relief to small and medium-sized developers navigating a planning system that many consider overly burdensome and slow.
What is BNG and why is it being reconsidered?
BNG became a legal requirement for major developments (10 or more dwellings or sites over 0.5 hectares) from 12 February 2024 under the Environment Act 2021. For small sites (1–9 dwellings), BNG became mandatory later, from 2 April 2024, following a two-month deferral to allow smaller developers time to adapt.
The policy obliges developers to deliver a 10% net increase in biodiversity for a development site, secured for at least 30 years. While environmentally ambitious, the rollout has posed disproportionate compliance burdens for SMEs, who often lack the resources for ecological assessments and metric calculations.
The Home Builders Federation (HBF) has cited inadequate national guidance and under-resourced local authorities as barriers to effective implementation, noting the risk of sidelining the very firms delivering the majority of small-scale housing.
Key BNG reforms proposed in the current consultation
The consultation, spearheaded by Deputy Prime Minister, Angela Rayner, proposes targeted reforms, including:
- BNG simplifications for minor sites (1–9 homes): These may be granted partial or full exemption from BNG or subject to simplified requirements.
- BNG metric streamlining for medium sites (10–49 homes): These developments would not be exempt, but would benefit from a less complex version of the biodiversity metric and potentially reduced unit costs.
- Shifting planning approval powers: Minor development applications could be approved by planning officers instead of councillors to expedite decisions.
- Exemption from the Building Safety Levy: Sites delivering 10–49 homes may be excluded from the levy introduced post-Grenfell to fund unsafe cladding remediation.
- £100 million loan fund for SME developers: The government is also proposing a funding mechanism to ease capital barriers to entry and scale.
These proposed changes align with the Government’s ambition to deliver 1.5 million new homes by March 2029, aligning with the parliamentary term rather than the calendar year.
Why this matters to SME developers
These changes are not merely administrative. They reflect growing political recognition of the vital role SME developers play in tackling the housing crisis. In the 1980s, SMEs accounted for 40% of housing output. Today, their share is a fraction of that.
The combination of more proportionate environmental obligations and financial relief could restore market share and make smaller sites – often brownfield or infill – more viable and attractive to investors and lenders alike.
The environmental debate
While these proposals could ease pressure on SME developers, environmental groups have raised serious concerns. Wildlife and Countryside Link warns that exempting smaller sites could leave nearly 75% of all new developments without biodiversity protections, potentially undermining the goals of the Environment Act.
The Office for Environmental Protection (OEP) cautions that reforms must be paired with robust governance, stating:
“We recommend that Government develops a strong system of governance for biodiversity net gain implementation, monitoring, reporting and enforcement, including publicly available information and regular review.”
DEFRA, leading the consultation, has acknowledged that options under review include simplifying the small sites metric and broadening access to off-site biodiversity markets.
“This consultation includes options around extending exemptions, simplifying the small sites metric and increasing ease of access to the off-site market.”
Frequently asked questions
Do I need to submit a BNG plan with my planning application, and who can create it?
Yes. A Biodiversity Gain Plan is typically required before final consent. This plan must be based on surveys and calculations by a qualified ecologist using the DEFRA biodiversity metric.
What happens if my site has little or no existing biodiversity, do I still need to deliver a gain?
Yes. Even on degraded or low-value sites, you must demonstrate a 10% net increase. This could involve habitat creation such as wildflower meadows, green roofs, or hedgerow planting.
Can I deliver BNG off-site if on-site delivery isn’t feasible?
Yes, off-site delivery is allowed, and sometimes necessary, when a site cannot support sufficient habitat creation due to constraints like density, access or viability. Developers can either:
• Creating habitats on other land you control
• Purchasing off-site units from habitat banks
• Buying government-issued statutory biodiversity credits (intended as a last resort).
How is BNG monitored and enforced over the 30-year period?
BNG delivery is secured through a legal mechanism (e.g., Section 106 or conservation covenant). However, national monitoring systems are still being scaled up, and local authority enforcement capacity remains limited as of mid-2025.
Which planning applications are exempt under transitional arrangements?
BNG does not apply to:
- Major developments (10+ units) with full planning permission granted before 12 February 2024
- Small sites (1–9 units) with full permission granted before 2 April 2024 Applications outside these thresholds are subject to the BNG requirements.
What SME developers should do next
As a specialist lender to SME developers, we understand the balance that must be struck, protecting the environment while delivering homes Britain urgently needs. These reforms are currently under consultation-not yet law. Until legislation is enacted, existing rules apply. SME developers should:
- Confirm which BNG regime applies to their current applications
- Begin biodiversity assessments early to avoid delays
- Engage planning consultants to understand site-specific risks
- Monitor updates from DEFRA and local planning authorities
We continue to monitor the consultation process closely and will share further insights as the policy picture develops.
Contact our property experts today to assess your project’s viability and explore tailored funding solutions.
For further updates on the BNG consultation, read the official DEFRA documents: