BNG Changes for Minor, Medium and Brownfield Development: What's Confirmed and What It Means
Alongside its response on NSIPs, Defra has confirmed a second set of Biodiversity Net Gain changes focused on minor, medium and brownfield development.
For developers and landowners trying to understand how BNG is changing, this article walks through the mist consequential decisions, what shifted between consultation and policy, and what he changes mean for both small-site developers and the off-site market.
In Brief
Defra has confirmed a new 0.2 hectare BNG exemption, amended the biodiversity gain hierarchy for minor development, and widened the geography for off-site delivery through LNRS-based spatial risk rules. For developers, this should make smaller schemes easier to navigate. For habitat banks, it reshapes demand rather than simply reducing it.
The Headline: New 0.2 Hectare Exemption
The biggest single change in the response is the introduction of an area-based exemption for any development with a site area of 0.2 hectares or less. This applies across all development types, not just residential. It uses the red line boundary that planning applications already require, and it does not apply where on-site priority habitats are impacted.
Defra estimates this exemption will remove around 50% of residential planning permissions that were previously subject to mandatory BNG. The smallest sites, where the cost and administrative burden of BNG was proportionately highest, will no longer need to deliver it. A full exemption for all minor development was consulted on but not taken forward. The 0.2 hectare threshold is the compromise position.
The legislation is expected to come into force before 31st July 2026, subject to parliamentary scheduling. Until then, the existing BNG requirement remains in place for all sites currently in scope.
The Bigger Commercial Shift: Off-site now sits higher in the hierarchy
If the 0.2 hectare exemption is the headline, the change to the biodiversity gain hierarchy for minor development is the more commercially significant story for the off-site market.
Under the current rules, developers are required to look at on-site enhancement and creation first, and can only move to off-site provision if on-site is genuinely not feasible. Off-site units sit below on-site delivery according to the hierarchy.
The new rules change this for minor development. Off-site biodiversity gains will be placed on the same preference as on-site enhancement and creation. *Statutory credits remain as a last-resort option, and the long-standing mitigation hierarchy in national planning policy still applies where there is significant harm to biodiversity.
Within the BNG framework itself, the structural bias toward on-site delivery is being removed for smaller schemes. This matters because it removes a significant commercial friction in the small-site market.
Under the current rules, a developer of a 12-home scheme could face lengthy negotiations with a local planning authority arguing that on-site delivery was technically possible - even where the ecological outcome would be limited. The hierarchy change provides regulatory certainty that off-site is an equally acceptable route for these schemes.
For SME developers, this reduces planning risk, shortens negotiations, and makes BNG compliance more predictable. For habitat bank operators, it removes one of the main structural constraints on demand from minor development.
What changed between consultation and outcome
Beyond the two headline shifts, several other decisions on the response carry material commercial implications. Here are seven of the key decisions.
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The 0.2 hectare exemption is not residential-only. It applies to any development with a red line boundary of 0.2 hectares or less, regardless of use class - including commercial, light industrial and mixed-use schemes, provided no on-site priority habitats are affected.
The existing impact-based de minimis exemption continues to apply at current thresholds. It remains available for larger sites with negligible biodiversity impact, such as change of use applications or solar panel installations on industrial buildings.
Why it matters: The de minimis route sits alongside the new area-based exemption for specific cases where a larger site has minimal habitat impact, though its use is expected to fall significantly once the 0.2 hectare threshold takes effect.
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The existing exemption for self-build and custom-build developments will be removed. Defra notes that the number of self-build exemptions claimed nearly doubled in five months following the introduction of mandatory BNG, suggesting the exemption was being misused. Most self-build and custom-build developments will fall under the new 0.2 hectare exemption anyway, so the practical effect is to close a loophole rather than add burden.
Why it matters: Single dwellings on plots above 0.2 hectares that were previously exempt as self-build will now be in scope for BNG. For developers using the self-build route on larger plots, this is a meaningful change. For everyone else, it tidies up an exemption that had become inconsistent with the rest of the regime.
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This applies to all development types, not just minor, and is one of the broadest-reaching changes in the response. The spatial risk multiplier, which reduces the biodiversity value of off-site units the further they are from the development site, will be assessed against Local Nature Recovery Strategy (LNRS) areas rather than Local Planning Authority (LPA) and National Character Area (NCA) boundaries.
There are 48 LNRS areas in England, compared to 337 LPA areas. The ‘local’ zone for spatial risk purposes is therefore becoming much larger.
Why it matters: This significantly increases the area within which a developer can source off-site units without triggering the spatial risk multiplier penalty. For habitat banks, it expands the geographic catchment from which they can supply units. The change will also help align BNG with future local government reorganisation, which will continue to alter LPA boundaries over the coming years.
The existing assessment approach will be retained for intertidal habitats (Marine Plan Areas) and for the watercourse module (waterbody and operational catchments). The spatial risk multiplier is not being disapplied - Defra’s view is that a structural incentive for local delivery is still appropriate. The net effect is to make local-but-broadly-defined delivery the most commercially attractive route.
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Off-site biodiversity gains will be placed on the same preference as on-site enhancement and creation for minor development. Statutory credits remain a last-resort option, and the wider mitigation hierarchy in planning policy still applies.
Why it matters: For minor development that remains in scope, this removes the regulatory bias toward on-site delivery and provides certainty that off-site is an equally valid route.
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The first legislative package, intendedbefre 31st July 2026, will introduce the exemption for temporary planning permissions of 5 years or less. Later in 2026, Defra expects to bring forward further exemptions for development whose primary objective is to conserve or enhance biodiversity, and for targeted development that enhances parks, public gardens and playing fields.
Why it matters: None of these are large categories in volume terms, but they each address a specific friction point. The biodiversity-led development exemption addresses the anomaly of habitat creation projects having to deliver BNG. The temporary permission exemption helps community-scale projects avoid disproportionate compliance costs, particularly when large red line boundaries create a high BNG requirement for projects with clear public benefit.
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For brownfield development, the response confirms reforms aimed at addressing the specific challenges around Open Mosaic Habitat (OMH). Defra will work with industry to review the metric definition, condition assessment and guidance for OMH to support correct identification and will explore creating a new medium-distinctiveness urban habitat category to fill a gap in the current metric.
Why it matters: Brownfield development with OMH has been one of the most problematic areas of BNG implementation, with consultees raising concerns about misidentification, inflated baselines, and disproportionate compliance costs. The reforms are aimed at making BNG workable on brownfield sites without removing the protection for genuinely valuable urban habitats.
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Defra has confirmed the current Excel-based metric tools will move to a digital, integrated service. No specific date has been given, but the direction is clear. Consultation responses asked for integrated mapping, mobile functionality, multi-user collaboration and scenario modelling, which Defra has indicated it will consider.
Why it matters: For developers and ecologists working with the metric daily, this signals Defra’s intent to make BNG less administratively burdensome over time and to integrated the metric more cleanly with the wider planning system.
What this means for the off-site market
The 0.2 hectare exemption removes around 50% of residential planning permissions from the BNG regime. Defra’s own analysis estimates this will reduce demand for off-site biodiversity units by around 10%, with around 12% fewer baseline biodiversity units being compensated for. That reduction is real and should be ackonwledge.
However, it does not tell the full story of how demand is likely to behave in practice.
First, the lost demand is concentrated at the smallest end of the market. Sites below 0.2 hectares typically generate low unit volumes, often single-digit purchases. For habitat banks focused on larger transactions, the proportional impact is likely to be smaller than the headline figures suggest.
Second, the biodiversity gain hierarchy amendment changes how the remaining minor development interacts with the off-site market. Sites that previously faced pressure to demonstrate on-site delivery can now use off-site units as an equally preferred option. This has the potential to increase accessibility to off-site delivery for schemes that remain in scope.
Third, the shift to LNRS areas for spatial risk assessment expands the geographic area within which a habitat bank can be considered ‘local’.
Taken together, the effect is not simply a reduction in demand, but a change in how that demand is structured - fewer very small transactions, alongside broader catchments and improved access to off-site delivery for qualifying schemes.
For habitat banks, the commercial impact will depend on positioning. Sites geared toward medium-volume, strategically located transactions may benefit from these structural changes, while those focused on very small, highly localised demand may see a more direct reduction in activity.
What this means for Developers
The reforms are more nuanced for the off-site market than for developers, but the directional signal is constructive for habitat banks positioned to serve medium-volume strategic procurement.
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The shift to LNRS boundaries for spatial risk assessment means a single habitat bank can credibly serve a much wider geographic area. Banks positioned in LNRS areas with significant development activity are particularly well-placed.
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The combined effect of the exemption, hierarchy change and LNRS shift is a market structure that increasingly favours habitat banks set up to handle medium-volume, strategically positioned procurement rather than very small, highly localised transactions.
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If your land has the potential to deliver alternative habitat mosaics meeting OMH ecological criteria, the planned reforms may open up new demand once the metric updates progress. Worth tracking through the rest of 2026.
The Bigger Picture
These reforms should be read alongside the parallel decisions on BNG for Nationally Significant Infrastructure Projects (NSIPs), the pending consultation on a brownfield residential exemption, and the wider direction of travel on Local Nature Recovery Strategies and the Nature Restoration Fund.
Notably, Defra has deferred most of the changes that were considered to the Small Sites Metric. The reasoning is that the 0.2 hectare exemption removes more than half of the smallest sites that had been driving the complains about the SSM, so the immediate pressure for reform has fallen away. Sites between 0.2 hectares and 1 hectare will continue to use the SSM in broadly its current form.
Taken together, the picture is of a maturing BNG regime. The smallest sites are being removed from scope where the burden was disproportionate. The off-site market is being structurally favoured for minor development, while wider spatial reforms affect all development types. The spatial risk multiplier is being recalibrated against more strategically meaningful boundaries. NSIPs are being added as a major new demand source from November 2026. And the metric itself is being progressively digitised and refined.
For developers, BNG is becoming more proportionate at the small end and more procurement-friendly at the medium end. For landowners, the off-site market is being treated as central infrastructure for nature recovery, not a fallback option.
The direction is getting clearer. The market will favour those who understand where BNG still applies, where it no longer does, and how off-site demand is being reshaped around that.
How do these changes affect your projects?
If you’re looking at how these changes affect your development pipeline or your land’s potential as a habitat bank, get in touch with the ILM team to talk through your options.
Sources
Defra consultation outcome: Improving the implementation of biodiversity net gain for minor, medium and brownfield development (published 28 May 2025, response published 15 April 2026)
Government response and summary of responses (15 April 2026)
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