SME developers are bracing themselves for huge extra costs when new rules requiring a housing or commercial project to increase biodiversity by ten per cent go live in November.

The National Federation of Builders, NFB, had hoped the government would raise the limit of nine to 39 new homes for defining a small site allowing greater use of a digitised habitat metric.

NFB housing and planning policy head Rico Wojtulewicz said: “We believe the government has missed a trick by not taking up our offer to extend the small sites metric to medium-sized sites of fewer than 40 homes and trailing it during the transition period, alongside the targeting of local species.”

The NFB has argued that the development of up to 40 homes would have been large enough to see if a particular biodiversity initiative such as installing bat boxes worked.

“We would like to have made it world-leading. The government doesn’t seem to understand that we are part of the solution,” said Mr Wojtulewicz.

Raising the cap for small sites to 39 homes would have allowed a significant number of SMEs to adopt the digitised habitat metric rather than employing an ecologist to assess biodiversity net gain.

The expenses associated with adopting the new rules are significant, for example, a developer building 40 new homes could face extra costs in the region of £200,000.

Property finance intermediaries Hank Zarihs Associates said the increases were massive and development finance lenders were concerned this would deter SMEs from building in rural areas.

Ten per cent cap on biodiversity net gain a relief

However, the construction industry is pleased the government has limited net gain to ten per cent and not given local authorities the option to increase the percentage.

It’s also happy the metric will consider site design which could include gardens and features such as bat boxes and bee bricks into the habitat metric.

Environment secretary Therese Coffey said the government would support and work with developers and planning authorities, who are to receive £16m extra funding, over the new rules.

“We want to help them ensure the developments of the future enhance biodiversity by creating thriving places for plants and wildlife, as outlined under our pioneering environmental improvement plan,” she said.

When the rules go live in November developers must assess the type of habitat affected and its condition before submitting plans to the local council.

They must outline how they will deliver the ten per cent benefit using ‘biodiversity metric trading’ rules. This requires any habitat affected within the boundary is replaced on a ‘like for like’ or ‘like for better’ principle.

If this is impossible then they can pay for improvements on other sites by purchasing ‘units’ via a private, off-site market. A government-run statutory credit scheme is being set up which developers can use as a last resort.

Small sites have a longer transition period until April 2024, and exemptions have been made for developments such as self-build homes.

Housing supply at risk under proposed planning changes
Over 20,000 new homes expected next to London transport hubs