In December 2025, Housing and Planning Minister Matthew Pennycook confirmed that the government will proceed with changes to biodiversity net gain (BNG) requirements introducing exemption of small-scale development. We caught up with Tom Beeley, one of our natural capital experts and Victoria Heath, an associate in our planning team to learn more about the proposed changes and the potential implications
BNG was a policy introduced to the planning system in February 2024 requiring most new development to provide a long term, net gain in biodiversity as part of the planning process. Eighteen months into the new policy government took the decision to review the implementation of BNG to address concerns being expressed mainly by small scale developers around the additional burden that BNG has introduced for small developments and the impact on housing delivery – one of the governments key ambitions for this parliament.
In response to the consultation government has confirmed that developments of up to 0.2 hectares will be fully exempt from BNG alongside a suite of measures aimed at simplifying BNG including further consultation on targeted exemptions for brownfield residential developments, potentially up to 2.5 hectares. Secondary legislation will be required to implement these changes, and no date has been set as yet.
Prior to the announcement concerns had been expressed from environmental sectors that government was compromising ambition around much need nature recovery for the sake of expediency in small scale and housing development. There was also concern that the change in policy undermined the market for habitat offsetting and the significant investment that has gone into this in response to the introduction of BNG policy and would hamper efforts to deliver private finance into nature restoration.
Government did row back on the proposals set out in the initial consultation which would have seen sites of up to 0.5 hectares exempted. We asked our natural capital and planning experts for their views on the changes, the potential impacts and whether government have struck the right chord with the changes?
Tom said: “It is a careful balancing act. Nature in Britain is in a state of serious decline and BNG is a part of the policy jigsaw to help address this. However, there were signs that the policy wasn’t working for small sites with examples where the cost and additional planning burden of BNG far outweighed the likely benefit provided for nature. This said this was a market established from a standing start which was always going to need time to bed in and start operating effectively. The past 6 months has seen an influx in habitat bank registrations with a ready market of units now available which has addressed some of the constraints seen previously - it remains an evolving picture.
Streamlining is sensible to ensure smaller scale development is not adversely affected especially given governments objectives around housing. However, we shouldn’t forget that BNG was introduced to embed environmental value into the planning process, not to become optional when things get challenging. If exemptions are widened too far, we risk losing the cumulative gains that smaller sites collectively deliver. The planning system works best when environmental and development objectives move forward together, not in competition.”
Victoria said: “BNG has been a big change for the planning process adding further complexity and time scales to an already complex process. It has taken time for developers, planners and local authorities to get to grips with it and implement new processes to make the system work. One of the biggest lessons from recent years is the importance of early collaboration. When planners, ecologists and developers work together from the outset, BNG becomes an opportunity rather than an obstacle. The challenge now is ensuring any revised regulations still encourages that joined‑up approach.
On what the changes mean for developers Victoria said ‘the most important thing to highlight is that these changes will require legislative change and are not yet implemented. There is currently no time scale for the changes to be introduced. As such the announcement changes nothing now and even small-scale development remains within the scope of BNG for the time being
Once changes are implemented it seems likely that many small planning applications will fall outside of scope of BNG which should reduce costs and some of the planning burden associated with BNG elements. This will benefit not just housing delivery, but the myriads of other small-scale applications we see from the likes of utilities providers whose applications are also caught by BNG.
We don’t recommend waiting for the changes to submit planning currently as there is no clear timescale for implementation of these changes which is frustrating.
Tom added ‘for habitat offset providers the policy change will reduce the size of the market for biodiversity offset. However, whilst applications for development of less than 0.2ha make up a large proportion of planning applications, they account for a much smaller proportion of offset unit demand often requiring just fractions of units which can end up disproportionately costly. We are confident that unit demand will continue to grow despite the changes with the introduction of BNG to the NSIP regime in May 2026 and a growing realisation amongst developers that purchasing fully verified offset units is often a more straightforward, ecologically beneficial and cost-effective means of achieving BNG.
Tom and Vicky added that overall, the changes announced are proportionate and strike a reasonable balance between nature and development. Many of the issues that have arisen were flagged early in policy development and might have been addressed by better engagement to reflect the breadth of projects subject to planning applications. Clarity and consistency is crucial for both developers and habitat providers and we would urge government to ensure the changes announced are implemented in a timely manner to reduce uncertainty.