The report finds that the current emphasis on delivering BNG within development boundaries is severely limiting its potential. While BNG was introduced under the Environment Act 2021 to ensure development leaves biodiversity in a better state, to date the vast majority of delivery is currently happening within the development site – despite the evidence that this approach is poor for biodiversity and economically incredibly inefficient.

Most developments are too small to deliver any meaningful on-site biodiversity value through BNG and such areas have a short shelf life because the 30-year management liabilities on the developer are usually handed over to ill-equipped management companies – developers discharge their liabilities to third parties. But, led by the policy, developers have been favouring on-site solutions. However, analysis and evaluation shows this is high cost (if development land value and loss of development potential is considered) and flawed in terms of biodiversity delivery. Removing this preference (as is proposed in the recent government consultation on BNG and nationally significant infrastructure) will make it easier for developers to deliver their legal compliance by purchasing off-site BNG units which are far better for biodiversity (because much bigger and better habitat areas can be created off- site) and cheaper for the developer. Housing residents would still benefit from managed landscaping and planting (through landscaping conditions) but without conflating this with biodiversity uplift.

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Key findings

 

• Ecological performance: On-site BNG is typically delivered in small, fragmented and disturbed areas, offering very limited biodiversity uplift. Off- site BNG, by contrast, is delivered on larger, better-connected sites with professional management and long-term funding, enabling more meaningful and measurable ecological outcomes.

• Cost efficiency: On-site BNG units can cost considerably more when land value and lost development potential are properly included. Off-site units cost approximately £27,000 each (*2).Modelling shows that the costs of delivering just 10% of the total site’s BNG requirement are substantial at about 4x the cost of delivering all of the BNG requirement off-site.

• Developer impact: On-site BNG could add a cost of £12,000-£15,000 per house (£400-£500/year for a 30-year term), compared to £3,000 (£100/year) when all the BNG requirement is delivered off-site. It is important to realise that BNG costs should largely be deducted from the residual land value – i.e. the price paid for the development land, so ultimately the landowner should foot the bill from the windfall value uplift when land is allocated for development, rather than the house buyer. Developers are often pressured to deliver BNG on-site because of the policy preference implemented by planning authorities, even when it reduces housing supply and increases risk.

• Governance and enforcement: On-site BNG is rarely monitored or enforced, with long-term liabilities often passed to residents’ associations or management companies. Off-site BNG is secured through legal agreements and subject to formal oversight, offering greater certainty for Local Planning Authorities (LPAs) and developers.

• Market potential: Despite government expectations that over 50% of BNG would be delivered off-site, in reality only 10% or less of BNG is currently being delivered off-site. Increasing this will drive a private market for nature, enhance the UK’s leadership in nature finance and boost delivery against the target to restore 500,000 hectares of nature by 20303.

 

Recommendations

 

The report sets out five key recommendations to unlock the full potential of BNG:

 

1. Reconsider the on-site preference and support off-site delivery: Government should remove the sequential preference by the LPAs for on-site BNG and enable developers to purchase off-site units from professionally managed habitat banks. This would unlock larger-scale nature restoration, reduce costs and complexity for developers, and accelerate housebuilding. Biodiversity restoration and greenspace provision should be treated as distinct objectives.

2. LPAs should champion off-site BNG delivery: Local planning authorities should promote off-site BNG through local plans and development management and local nature recovery strategies, offering a faster, simpler, and more effective route for developers and LPAs alike.

3. Strengthen compliance and enforcement for on-site BNG: LPAs should be given the necessary tools for monitoring and enforcing on-site BNG, in particular appropriate resources to ensure delivery and rectify failures and hence should be held more accountable for monitoring and enforcing on-site BNG.

4. Create a level playing field between on-site and off-site BNG: If on-site BNG is retained, it must meet the same standards as off-site delivery: transparent registration, secured 30-year funding, and professional management. Both approaches should adhere to the Defra/BSI nature standard.

5. Improve government communications on BNG: Central government should review and enhance consistent public messaging around BNG, clearly articulating its benefits for both biodiversity and society.

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The report identified that a strategic shift towards off-site BNG would unlock greater biodiversity gains, reduce costs for developers, and support the UK’s ambitions to lead in nature markets and green finance.

 

David Hill

July 2025

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1 Hill, D., Pindham, N., Beedell, J., Beasley, N. & Hindle, R. (2025). The comparative value of on-site vs off-site Biodiversity Net Gain for restoring nature. Environment Bank. June 2025.

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2 The cost of delivering one BNG unit on-site, considering all costs (including the development land price paid for the land, the reduction in the number of housing units that can be built, and the profit foregone from them) is £896,000. Even if the cost of the land on which the on-site BNG is placed is ignored (ie. netted off at zero) and the profit foregone from the houses that would have occupied the BNG area reduced to 5% (from the typical rate of 20% used in the model), the on-site BNG unit costs would still be £112,000 each (compared to the c £27,000 per unit off-site cost).

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3 HM Government (2023). Environmental Improvement Plan 2023: First revision of the 25 Year Environment Plan. Defra.

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Download the full report here

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