Two years after BNG’s introduction, home builders warn that difficulties in implementing current rules are slowing home delivery, with SME builders particularly impacted
A new report by the Home Builders Federation (HBF) reveals that 84% of home builders continue to find implementing Biodiversity Net Gain (BNG) challenging, with the policy having a clear and growing impact on development viability and housing delivery, particularly on smaller sites. Whilst proposed changes to assist SMEs were welcomed, two-thirds of respondents do not think they go far enough to make a difference.
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 facing the industry.
Local authority capacity remains a significant challenge for the delivery of BNG, as delays in reviewing biodiversity assessments continue to affect a large proportion of home builders. 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 £3k per new home, alongside the recently announced Future Homes Standard, estimated to cost on average £10k per home, the amount of flexibility in a development's finances has been severely curtailed.
Respondents said that 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.
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.
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. While the industry supports the principle of BNG, which is valuable both for nature and for demonstrating to communities the benefits of development, the survey shows that its implementation is placing increasing pressure on housing delivery.
The industry’s response to the Government’s proposed reforms to BNG has also been cautious. Last year, the Government proposed introducing a 0.2 hectare (ha) area-based exemption, meaning sites smaller than this threshold would not be required to deliver BNG. Local authorities will also be restricted in setting their own BNG requirements on most sites. However, only a third of SME home builders believe the changes will improve the cost and ease of delivering BNG, while 63% do not expect the measures to make a substantial difference.
HBF is urging Government to ensure BNG is implemented without restricting housing supply by addressing the recruitment crisis for public sector ecologists, providing clearer guidance, and including baseline biodiversity assessments in local plans. It stresses the need for further consideration of cumulative policy cost pressures and calls for Government to scrap incoming cost pressures on development, such as the Building Safety Levy and rising Landfill Tax, rather than reconsidering BNG in its entirety.
The report also calls for stronger support for SMEs through a higher small sites threshold, as the proposed exemption of 0.2 hectares is widely seen as too low, a more accessible off-site biodiversity market, and a Quality Mark for units.
While BNG is now becoming embedded in the home building process, the findings demonstrate the need for further reform to ensure the policy delivers for both the environment and the housing market.
Neil Jefferson, Chief Executive at the Home Builders Federation, says, “The cumulative impact of Biodiversity Net Gain requirements and wider cost pressures is increasingly affecting the viability of housing developments, with too many sites becoming difficult to bring forward.
“The home building industry supports the goals of BNG and remains committed to delivering new homes alongside meaningful improvements to nature.
“However, we need Government to provide greater clarity and ensure a consistent approach across local authorities and to provide support for SME builders so that these requirements do not become a barrier to delivering much-needed housing.”