Budgeting biodiversity net gain: on-site or units
A net gain budget has four lines: on-site creation, 30 year management, off-site units and statutory credits. The structure transfers between schemes even when prices do not.
A biodiversity net gain budget has four possible lines, and most schemes end up using two or three of them: on-site habitat creation and its 30 year management, off-site units bought from a habitat bank or a landowner, statutory biodiversity credits bought from government as a last resort, and the professional fees to run the metric and write the gain plan. The order matters because the statutory framework pushes you down it in sequence, and each step down costs more per unit of gain than the one above.
The honest position on cost is that unit prices vary by habitat type, by catchment and by how badly the buyer needs them, so a national average figure would mislead you. What does transfer between schemes is the structure of the budget and the decisions that move it.
What the statutory requirement actually obliges
Mandatory biodiversity net gain under the Environment Act 2021 applies through a planning condition deemed to be attached to most planning permissions. It took effect for major development on 12 February 2024 and for small sites on 2 April 2024, with some exemptions and a separate commencement for nationally significant infrastructure.
Three obligations follow. The development must deliver at least a 10 per cent gain in biodiversity value measured by the statutory metric against the pre-development baseline. On-site habitat enhancements of any substance, and any off-site gains, must be secured and managed for at least 30 years. And a biodiversity gain plan must be submitted to and approved by the local planning authority before development begins.
The metric must be completed by a competent person, and the Environment Act regime expects exactly that. A drafted Biodiversity Net Gain Assessment can structure the submission and set out the baseline narrative, and the metric calculation and the ecological judgements behind it need a competent ecologist.
The hierarchy is the budget driver. On-site gains are preferred, then off-site gains, then statutory credits. You cannot jump to credits because they are easier to arrange.
Costing on-site habitat creation
On-site creation looks cheapest and often is, provided the land is not worth more as developable area. That is the trade every appraisal has to make explicit: a hectare given to species-rich grassland is a hectare not sold as plots.
The cost lines for on-site delivery are predictable. Ground preparation and any soil stripping or amelioration. Seed, plants or whips, which differ by an order of magnitude between amenity grassland and species-rich meadow. Establishment works across the first three to five years, when failure rates are highest. Fencing and protection. And the design and supervision fees to get it specified properly.
Two things inflate on-site costs unexpectedly. Creating a higher distinctiveness habitat requires a longer time to target condition, which the metric penalises through its time-to-target multiplier, so you need more area to produce the same number of units. And habitat creation on poor ground, compacted construction land or imported subsoil frequently fails first time, which means doing it twice.
Where the scheme has a watercourse, the watercourse units are calculated separately and cannot be traded off against area habitat units. Budget them as their own line.
Thirty year management and monitoring as a cost line
The 30 year obligation is the line most often underpriced. It covers management, monitoring, reporting and the legal mechanism that secures it.
Management of species-rich grassland means an annual cut and collect, which is a different machine and a different contract from amenity mowing. Woodland and scrub need thinning and protection. Wetland features need silt management. Then there is monitoring: condition assessment at defined intervals by an ecologist, with a report to the authority, typically in years 1, 2, 5, 10, 15, 20, 25 and 30 or a similar schedule set by the agreement.
The commercial answer on a housing scheme is usually a management company funded by a service charge, with the obligation secured through a section 106 agreement or a conservation covenant. The management company route transfers the cost to residents, and it transfers the risk too: if the service charge is set without provision for a cut and collect contract and periodic ecological monitoring, the obligation becomes unfunded in year six.
Price it as a capitalised sum. Thirty years of management, eight monitoring visits and reports, a contingency for replanting, and the cost of administering the agreement. That number, not the planting cost, is what makes on-site delivery expensive on a small site. Scheme costs that fall due at different stages are set out in when planning costs fall due on a small housing scheme.
Off-site units and what the price reflects
Off-site units are bought from a landowner or a habitat bank, registered on the biodiversity gain sites register, and secured for 30 years by a section 106 agreement or a conservation covenant.
The price reflects four things. The habitat type and distinctiveness being created, because high distinctiveness habitats cost far more per unit. The spatial relationship to your site, since the metric applies a spatial risk multiplier that reduces the value of units from outside your local planning authority area or national character area, meaning you need more of them. The scarcity of supply in your catchment. And the vendor's own 30 year management and monitoring cost, which is embedded in the price.
| Route | What drives the price | Risk carried by the developer |
|---|---|---|
| On-site creation | Land value, works cost, 30 year management | Establishment failure, management funding, metric penalties |
| Off-site units | Habitat type, spatial multiplier, local scarcity | Availability at the time needed, price movement |
| Statutory credits | Government published tariff by habitat tier | Price level, since it is set deliberately high |
Timing is a risk nobody prices. Units have to be secured before the gain plan is approved, and the gain plan has to be approved before development begins. A scheme that leaves unit procurement until after permission can find the local supply taken, which pushes it to units with a worse spatial multiplier or to credits.
Statutory credits as a last resort
Statutory biodiversity credits are sold by the government and are deliberately priced above market rates so that on-site and off-site delivery remain more attractive. They are available in tiers reflecting habitat distinctiveness, with the published tariff set out by Defra and revised from time to time, so take the figures from the current published schedule.
Two features make credits unattractive beyond the price. The requirement to demonstrate that on-site and off-site options were explored first means a credits-only approach invites scrutiny. And credits deliver no local benefit, which gives objectors and members a straightforward line to argue at committee.
Credits do have a legitimate use. They are a backstop for the last fraction of a unit requirement that cannot be sourced locally, and they are a known-price fallback that lets a developer close a funding appraisal while off-site negotiations run. Budget them as a contingency line at the published tariff rather than as a plan.
The gain plan and the approval process
The biodiversity gain plan is a submission after permission and before commencement, and it is a pre-commencement step that can hold up a start on site.
It sets out the pre-development biodiversity value, the steps taken to minimise adverse effect on habitat, the post-development value of on-site habitat, any registered off-site gains allocated to the development, and any credits purchased. The authority approves or refuses it, and a refusal means resubmission with the gaps closed.
Three practical points. The pre-development baseline is taken at a fixed date, and clearing a site before that assessment does not help you because the regime addresses degradation of the baseline. The authority's approval is not automatic, and the processing time has to sit in the programme ahead of the planned start. And the plan must align with the metric calculation and the management plan, so inconsistency between the three is the most common cause of a refused plan. An ecological Preliminary Ecological Appraisal usually supplies the habitat data the metric runs on.
Comparing routes on whole-life cost
Compare on a whole-life basis at the scheme level, in this order.
- Value the land the on-site habitat would occupy at its developable value, not at agricultural value.
- Add the works, establishment and 30 year management and monitoring cost for on-site delivery, capitalised.
- Price the off-site units actually available in your catchment, with the spatial multiplier applied, including the vendor's management cost.
- Add the credits tariff for any residual requirement at the current published rate.
- Add the professional fees for the metric, the gain plan, the management plan and the legal work on each route.
Illustrative example. A scheme of 45 homes on 2.1 hectares of improved grassland has a 10 per cent requirement that on-site delivery could meet by giving up about 0.35 hectares to species-rich grassland and scrub. The developable value of that land exceeds the cost of off-site units available in the same authority area, so the scheme delivers a smaller on-site enhancement and buys the balance off site. On a rural scheme where the same land has little development value, the arithmetic reverses.
Run the comparison before the layout is fixed. Once the masterplan is drawn, the on-site option is whatever land is left over, which is usually the land that produces the fewest units. See PlanScope pricing for what the supporting documents cost on each tier, and keep the metric itself with a competent ecologist.
This is general guidance, not legal advice. The statutory biodiversity metric must be completed by a competent person and the biodiversity gain plan approved by the local planning authority. Unit prices and the statutory credit tariff change, so check the current published schedules. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.
Frequently asked questions
What does mandatory biodiversity net gain require?
At least a 10 per cent gain in biodiversity value measured by the statutory metric against the pre-development baseline, significant on-site enhancements and off-site gains secured and managed for 30 years, and a biodiversity gain plan approved by the local planning authority before development begins.
Is on-site habitat cheaper than buying off-site units?
Only if the land has little development value. Once you value the land at its developable value and add the capitalised cost of 30 years of management and monitoring, on-site delivery on an urban or suburban site is often more expensive than off-site units available in the same authority area.
Why do off-site unit prices vary so much?
Habitat type and distinctiveness, the spatial risk multiplier that reduces the value of units from outside your authority area or national character area, local scarcity of supply, and the vendor's own 30 year management cost embedded in the price. A national average figure would mislead any individual appraisal.
When should statutory credits be used?
As a backstop for a residual requirement that cannot be sourced locally, or as a known-price fallback while off-site negotiations run. They are deliberately priced above market rates, deliver no local benefit, and a credits-led approach invites scrutiny because on-site and off-site options must be explored first.
What happens if the biodiversity gain plan is refused?
Development cannot lawfully begin, because the deemed condition requires an approved plan. The usual cause of refusal is inconsistency between the plan, the metric calculation and the management proposals. Resubmission with the gaps closed is the route, so allow processing time in the programme before the planned start.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.