Small Sites Metric guidance<\/a> notes run to 55 pages.<\/p>\nGiven the level of understanding that developers and land buyers have to learn in order to be able to properly appraise development costs and the appropriate purchase price for sites, we do hope that the delay will be used to bring in greater clarity.\u00a0 Particularly as The House Builders\u2019 Federation had previously criticised the guidance for containing \u2018significant gaps\u2019.<\/p>\n
Costs<\/h2>\n
Unless the additional costs are factored into the residual value of site acquisitions, it is likely that costs will fall to the developer.\u00a0 This is particularly the case for land that has already been acquired in whole or which is under option. Hence, there is some urgency by which developers \u00a0need to ensure that those costs are factored into their financial modelling.<\/p>\n
In short, the biodiversity condition of each site will have to appraised as a starting point.\u00a0 The developer then needs to assess how the biodiversity lost is returned.\u00a0 This can take one of three forms, depending upon the specific details \u2013 replacement of habitat elsewhere on site, replacement off-site and acquisition of BNG credits.<\/p>\n
Whilst the deliberately inflated costs of BNG credits are unlikely to be reality for most sites, there will still be costs for on-site and off-site locations to reach the 110% requirement.<\/p>\n
Longer term implications<\/h2>\n
The BNG and maintenance would have potentially long term implications if there is a requirement for ongoing intervention to maintain their condition.\u00a0 This could have further valuation and accounting implications, including the need to introduce provisions that cover periods \u00a0long after sales have completed. Not only can this affect the availability of future capital, \u00a0but extends to \u00a0changes \u00a0in estate management services and the costs associated with that.<\/p>\n
Value of land<\/h2>\n
As mentioned above, \u00a0increased BNG costs for certain classifications of land, could mean that developers see the value of land banks\u00a0 and sites for purchase, shift in value.<\/p>\n
For those sites where there is not enough on-site space to meet the requirements, developers will need to secure land off-site.\u00a0 However, Natural England\u2019s Biodiversity Gain Site Register is not yet open and it will take time before there is a balanced supply to demand.\u00a0 This naturally plays into the hands of free market economics and could see short term spikes that create unfeasible situations for some.<\/p>\n
And of course, the opposite is also true.\u00a0 For landowners including developers with landbanks of attractive land, this of course represents opportunity.<\/p>\n
In summary<\/h2>\n
There is a bit of respite, but there will be additional costs and complexity for housebuilders to absorb into their business model.\u00a0 Finance teams should look to this period to get to grips with the likely costs and ensure that there is a joined up approach with buying \/ promoter teams because there could be a significant shift away from traditional site valuation models.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
The Bio-diversity Net Gain (BNG) requirement means that any habitat lost by a development must be replaced with enhanced habitat \u00a0such that the improvement in habitat scores at least 110% of the value of the habitat that is being lost. When does this apply? The new Bio-diversity Net Gain requirements had been expected to become[…] <\/p>\n
![\"Field](\"https:\/\/www.goodmanjones.com\/blog\/wp-content\/uploads\/2023\/10\/Biodiversity-Net-Gain-e1696513411886.png\")
<\/p>\n