Difficulties in implementing current biodiversity net gain (BNG) planning rules are slowing home delivery, according to homebuilders, with SME builders being particularly affected.
BNG, introduced under the Environment Act 2021, requires most developments to deliver at least a 10% increase in biodiversity value compared to the site’s pre-development baseline. The policy became mandatory for major developments in February 2024 and for small sites in April 2024 and is designed to ensure that new homes and environmental benefits can be delivered together.
Two years after BNG was introduced, a new report by the Home Builders’ Federation (HBF) reveals that 84% of home builders continue to find implementing the BNG policy challenging, with it having a growing impact on development viability and housing delivery.
The research, based on a survey of HBF members conducted in early 2026, shows that 60% of respondents reported that BNG has influenced their company’s decision not to pursue sites that may previously have been viable. Uncertainty around agreeing on the cost and type of biodiversity enhancements needed on a site was viewed as a major cause of concern.
Significant challenges remain across the system, with respondents highlighting ongoing uncertainty around aspects of BNG policy, inconsistencies in how requirements are applied, and the cumulative burden of increasing regulatory and cost pressures. Local authority capacity is also a significant challenge for the delivery of BNG, as delays in reviewing biodiversity assessments continue to affect a large proportion of home builders. Some 80% of respondents in 2026 reported planning delays due to BNG. Similarly, 66% cited insufficient resources or expertise, compared with 79% last year, showing some progress, but persistent gaps in council capacity are still slowing development.
With the industry facing a huge increase in taxes and policy costs generally, including a further Government levy set to be imposed in the Autumn of £3,000 per new home, alongside the recently announced Future Homes Standard, which is estimated to cost on average £10,000 per home, the amount of flexibility in a housing development’s finances has been severely curtailed.
Respondents also said they had reduced the number of homes on a site in response to these pressures, as land must be set aside for habitat creation and enhancement, which raises concerns about overall site viability.
There are emerging signs of progress, particularly in the off-site biodiversity unit market, where availability has improved significantly. Some 47% of respondents now report sufficient supply, up from 31% last year, indicating that the private market is beginning to mature as more habitat banks come forward.
The second annual BNG survey of the home building industry received responses from over 80 companies, six in 10 of which are SME home builders.