Biodiversity Net Gain (BNG)

A Habitat Bank is a strategic parcel of land where a landowner or specialised operator, for example Connected Habitat, proactively creates and enhances habitats to generate certified Biodiversity Units before a buyer (developer) needs them. This mechanism forms the backbone of the off-site BNG market.

The process begins with habitat creation, often converting low-quality agricultural land into higher-value ecosystems like species-rich grassland or woodland. This ecological uplift is quantified using the Statutory Metric. To formalise the bank, the land must be legally secured for a minimum of 30 years using a land covenant (Section 106 Agreement or a Conservation Covenant), and the site must be entered onto the national Biodiversity Gain Sites Register to prevent units from being double-counted. The units are then sold to developers who need to meet their off-site BNG requirements.

This market mechanism is scalable, allowing a single habitat bank to sell units to multiple development projects, guaranteeing the landowner a reliable, long-term income stream to fund the habitat's 30-year maintenance and monitoring obligations.

There is no fixed price for a biodiversity unit. The valuation is determined by a complex interplay of the supplier's costs and market demand influenced by the BNG Metric’s risk factors. The price a habitat bank charges must first and foremost cover all costs over the 30-year term, including legal fees, initial capital works (e.g., planting, groundworks), long-term management, monitoring, and a sufficient profit margin and risk buffer.

The market value is heavily shaped by the Metric’s spatial and temporal risk factors. Units derived from rarer or harder-to-create habitats tend to be more financially valuable due to their scarcity. Furthermore, the Metric applies a Spatial Risk Multiplier that penalizes developers for securing units far from their development site; this makes locally sourced units significantly more desirable.

Finally, the price ceiling is set by the Statutory Biodiversity Credits sold by the government, which are deliberately priced at a high premium (ranging from tens to hundreds of thousands of pounds depending on habitat type) to ensure the private market remains the primary source for meeting BNG obligations.

For developers, BNG is simultaneously a mandatory project cost and a new market opportunity. The cost of compliance begins with significant upfront investment in specialist services, including ecological surveys, metric calculations, legal agreements, and detailed design for the Biodiversity Gain Plan (BGP). If the 10% gain is achieved on-site, the developer accepts a non-negotiable 30-year liability for managing those new habitats, requiring long-term funding and monitoring. If off-site solutions are needed, the cost shifts to purchasing biodiversity units from the private market or, as a last and most expensive resort, buying Statutory Credits from the government.

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Conversely, BNG has established a clear, long-term commercial opportunity, primarily through Habitat Banking. Landowners can proactively create, enhance, and legally secure habitats on non-development land, generating certified biodiversity units to sell on the open market. Crucially, this opportunity extends to developers with large land portfolios who can establish their own Developer-led Habitat Banks on separate land they control. This strategy converts an external purchase cost into an internal delivery mechanism, providing cost certainty while enabling the sale of surplus units to other developers, thereby establishing a new profit centre and long-term asset base. The 30-year legal commitment underpinning BNG creates a stable, fundable asset class and a reliable, diversified income stream for land managers.