BNG Reset - Smaller Sites and Big Infrastructure
- Oakbank Team
- Apr 16
- 5 min read
Updated: 4 days ago
On 15 April 2026, Defra published responses to two parallel Biodiversity Net Gain (BNG) consultations and opened a third on an additional targeted exemption for brownfield residential development. Together, the responses confirm when major infrastructure projects will start drawing on the off-site biodiversity unit market, exempt around half of the smallest residential sites, and broaden the geography in which a land parcel can supply units to a development.
What has been confirmed
BNG has applied to major development in England since 12 February 2024, and to small sites since 2 April 2024, with some exemptions. But two big pieces have been outstanding until now: how it will apply to major infrastructure projects and what should change for the smallest sites where the cost and administrative burden felt disproportionate.
The first government response confirms that BNG will apply to Nationally Significant Infrastructure Project (NSIP) applications made on or after 2 November 2026 (previously, the go-live date was May 2026, but this has moved to provide more preparation time.) NSIPs are the largest developments in the country: major reservoirs, power stations, grid upgrades, large solar farms, motorways and rail schemes. This brings a substantial new class of potential demand for off-site biodiversity units which land managers can provide.
The second response outlines reforms to BNG for minor, medium and brownfield development. Defra expects secondary legislation to introduce a new 0.2 hectare site‑area exemption by the end of July 2026 (subject to parliamentary scheduling), and the biodiversity gain hierarchy will be amended for minor development so that offsite biodiversity gains are given the same preference as onsite habitat creation or enhancement. Various other changes are intended to be made to the statutory biodiversity metric over the coming months, subject to parliamentary scheduling.
The 0.2 hectare exemption
Previously announced in December 2025, any site area within the red line boundary of 0.2 hectares or below will fall outside BNG, regardless of use class, provided no on-site priority habitats are affected. This will apply, once the legislation takes effect later in 2026, to residential, commercial and mixed-use schemes alike.
Government estimates this will remove around 50% of residential planning permissions previously subject to mandatory BNG. By the department's own analysis, demand for off-site biodiversity units is expected to fall by around 10%, with around 12% fewer baseline biodiversity units being compensated for. In the same package, the existing self-build and custom-build exemption is being removed; Defra notes that claims for it nearly doubled in the five months after BNG went live.
Has off-site delivery got easier?
Two changes will reshape how the off-site market works in practice:
For all development types, the spatial risk multiplier (which discounts the value of off-site units the further they sit from a development) will be assessed against Local Nature Recovery Strategy (LNRS) areas. There are 48 LNRS areas in England, against 337 Local Planning Authorities (LPA). The geographic area in which a piece of land counts as "local" to a development is therefore becoming much larger. Watercourse units will continue to be constrained by catchment rules
For minor developments and NSIPs, the biodiversity net gain hierarchy is being amended so that off-site biodiversity gains sit at the same level of preference as on-site enhancement and creation. Statutory biodiversity credits remain a last resort, and the wider mitigation hierarchy in national planning policy still applies. In practical terms, this gives both categories clearer permission to source units off-site, removing the structural bias that has pushed minor schemes into often unproductive on-site delivery, and recognising that for major infrastructure, strategic off-site delivery may produce better ecological outcomes.
NSIPs will be able to allocate off-site biodiversity gains, from any LPA, National Character Area or Marine Plan Area the NSIP BNG boundary is located within, to their development without any spatial risk multiplier penalty. Although Defra will not be changing how the spatial risk multiplier applies to watercourse units where a project spans multiple catchment areas.
BNG for major infrastructure projects (NSIPs)
For NSIPs, Defra has retained the 10% biodiversity gain objective rather than imposing a higher tier. The Royal Society for the Protection of Birds (RSPB) campaigned for greater ambition but Defra's view is that consistency with the Town and Country Planning Act regime gives developers and the off-site market the certainty they need.
The most consequential technical change is the introduction of a "BNG boundary". Only habitats negatively impacted by the development, or used to contribute towards BNG, need to be included in the baseline. Unimpacted habitats within the wider Development Consent Order limits are excluded by default, which materially reduces the calculation for some projects. Off-site delivery is permitted as a first-instance strategy rather than a fallback and developers can aggregate area-based off-site gains across all the LPAs a project crosses without taking a spatial-risk penalty (watercourse units still must stay within the same catchment).
What this means for farmers and landowners
The land that lends itself best to off-site BNG is rarely a farm's most productive ground. Improved or "other neutral" grassland currently grazed but yielding modest margins can often be enhanced into species-rich grassland, generating a meaningful uplift in biodiversity units while remaining in low-intensity grazing or hay management. Awkward arable corners, persistently wet ground, marginal field margins, ponds and small woodland blocks frequently produce stronger returns as habitat than as crop or pasture.
Defra's combined-environmental-payments guidance confirms that it may be possible to combine BNG income with other environmental payments (e.g. SFI and CS), provided you can evidence additionality and avoid being paid twice for the same outcome. The catch is the 30 year commitment - land entered into a BNG agreement must be legally secured, with a Habitat Management and Monitoring Plan (HMMP) setting out delivery and monitoring.
For a farm within an LNRS area where a major infrastructure project is planned (such as energy corridors, reservoirs or transport upgrades), the April changes broaden the catchment from which buyers can source. For land in a "quieter" area, the 0.2 hectare exemption modestly thins demand at the smallest end. The overall picture, however, is of a market with a major new buyer class arriving in November 2026 and we are already scoping options ahead of November 2026.
Practical next steps
If you are weighing up whether some of your land could and/or should earn income through BNG, the sequence is fairly consistent:
Get a baseline survey of habitats and condition before committing to anything. The value of any uplift depends on knowing what's already there.
Check which LNRS area your holding sits in, and whether its priorities align with what your land could deliver. Sites that match LNRS priorities attract the strategic-significance multiplier in the metric and may be of higher value.
Identify the parcels that are genuinely low-yielding from a farming perspective. Awkward corners, persistently wet ground, light-soil arable strips and over-rested pasture often produce more value as habitat.
Work out how a BNG agreement would interact with any SFI or CS arrangements, especially as windows for new SFI applications are opening later in the year and potential for scheme extensions is not out of the question. Stacking is allowed, but the additionality rules must be respected.
At Oakbank we work with farms and estates across the UK on this sort of decision, from baseline ecological surveys and uplift modelling through to natural capital strategy and scheme stacking. If you'd like to talk through whether parts of your land could sensibly enter the BNG market, get in touch with one of our advisors.
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Consultation response summaries and details:
