Habitat Bank Creation: What you need to know

The habitat banking scheme was created as a result of the Environment Act, which was legally mandated in 2021, and introduced the concept of Biodiversity Net Gain (BNG). Under the act, which will officially become mandatory at the end of 2023, developers are required to consider the long-term environmental impact of their projects. They are also required to minimise biodiversity loss and ensure the environment is left in a better state than it was before. This is where biodiversity net gain comes into play.

Biodiversity net gain can be implemented on-site and should be maintained for a minimum of 30 years. If biodiversity net gain cannot be completed on-site, or can only be partially completed on-site, the remainder can be accommodated off site.

Habitat banking has now been created to accommodate for the demand of delivering biodiversity net gain. Developers can use habitat banking to generate biodiversity units. These units can be purchased by a developer to ensure they comply with biodiversity net gain requirements.

Why is habitat bank creation required?

Local planning authorities often require habitat bank creation to offset the depletion of natural habitats caused by development. By making habitat banking a requirement, these authorities aim to safeguard the environment from adverse effects associated with development projects. This not only protects the immediate surroundings but also plays a crucial role in conserving natural resources for the benefit of future generations.

These requirements are commonly requested as part of planning applications for securing approval for proposed developments. Consequently, employing habitat banking approaches becomes instrumental in fulfilling these requirements and ensuring compliance with planning permissions.

Habitat bank creation also provides an alternative income stream for landowners and farmers as they can provide their land for a habitat banking scheme. They also retain ownership and management of the land whilst receiving tax-efficient annual payments.

Habitat bank creation

Our team of ecologists will collaborate with you to develop a long term management plan tailored to suit your development. We aim to achieve the optimal outcome for the natural environment in your specific location.

Our focus often involves establishing habitats such as species-rich woodlands, grasslands, wetlands, mixed shrub areas, or rewilding sites.

How large does a habitat bank need to be?

The size of a habitat bank depends on the specific requirements set by the local planning authority. A crucial consideration is the type and size of the development project it aims to mitigate.

Several factors contribute to determining the size of the habitat bank. These factors include the extent of habitat impacted by the development, the specific type of habitat, and the diversity of species it sustains. The objective is to create habitat banks that adequately compensates for the loss of natural habitat.

How can we assist?

Our team of ecologists and land managers have the knowledge and experience necessary to assist developers in meeting habitat banking requirements. Our team can assess your development site to determine which habitat banking methods would be suitable.

Our Ecology Director, Olivia Collington, holds a Natural England license. If you would like to find out more about the services we provide, feel free to contact us using the details below.

Creating a habitat bank: start with deliverability

A habitat bank is land managed to create or enhance habitats so that measurable biodiversity gains can be supplied to developments needing off-site provision. It is not simply unused land set aside for wildlife. A successful bank combines ecological opportunity, legal security, practical management and demand for the specific off-site biodiversity units it can provide.

In England, the Environment Act 2021 framework made at least 10% BNG mandatory for relevant major development from 12 February 2024 and small sites from 2 April 2024, subject to exemptions and transitional arrangements. This creates a route to market, but not a guarantee that every proposed habitat bank will sell its units.

Before commissioning detailed designs, consider land control, habitat potential, local development demand and the resources needed for a minimum 30-year commitment. Our habitat banking guidance provides an overview of how these elements connect.

Check land control and existing obligations

Begin with ownership and occupation. A freeholder, agricultural tenant, lender or party benefiting from restrictive covenants may have rights affecting the proposal. Access, sporting rights, drainage responsibilities, utility easements and public rights of way can influence both habitat design and future maintenance.

Existing environmental agreements also need review. Land already committed to a habitat outcome cannot automatically generate a second sale of the same gain. Grants, planning obligations and other nature-market arrangements may affect additionality, eligibility or permitted combinations of funding.

Obtain legal and financial advice before promising units to a buyer. The relevant question is not just whether habitat can be created, but whether the promised outcomes can be secured and delivered throughout the agreement period, including after a sale or change of occupier.

Commission the habitat baseline survey before changing management

The habitat baseline survey establishes the starting biodiversity value. An ecologist will normally classify terrestrial habitats using UKHab, map their extent and undertake a condition assessment where required. Hedgerows, watercourses and other features need appropriate survey methods and separate metric treatment.

A field described informally as poor pasture may contain valuable botanical interest or other constraints. Conversely, land with a relatively low starting value may offer an opportunity for enhancement, but only where soil conditions, hydrology and management support the proposed target habitat.

Keep accurate records of existing management and any recent changes. Survey timing may affect habitat identification and the confidence of condition scoring. Do not clear vegetation or simplify habitats to manufacture a lower baseline: degradation provisions and the need for credible evidence make this an inappropriate approach.

Model realistic habitat options using the statutory biodiversity metric

The statutory biodiversity metric compares the baseline with proposed habitat outcomes. It considers factors including area or length, distinctiveness, condition and strategic significance, alongside delivery risks such as establishment difficulty and time to target condition.

A BNG consultant should test more than one viable scenario. For example, grassland enhancement, wetland creation and woodland establishment can have different management needs, establishment periods and implications for the available unit mix. The largest headline uplift is not necessarily the most deliverable or marketable option.

Calculations must follow the metric's trading rules. Area-habitat, hedgerow and watercourse units are separate, and some habitat losses require particular replacement types. A buyer cannot necessarily use whichever units happen to be available. Explore biodiversity metric calculations before relying on an indicative unit estimate in a business plan.

Use local nature priorities without assuming an automatic uplift

Review the relevant Local Nature Recovery Strategy, or LNRS, alongside other applicable ecological evidence. Habitat creation that connects existing wildlife sites or addresses an identified recovery priority may provide a stronger ecological proposition than an isolated intervention.

Strategic significance is a defined input in the metric, not a discretionary marketing label. The score must be justified using the current metric guidance and relevant published strategies. Being within an LNRS area does not automatically mean every habitat proposal qualifies for the highest score.

Discuss the evidence with the local planning authority or relevant agreement body where appropriate. Distinguish strategic significance from spatial risk: the former concerns ecological priorities, while the latter affects how off-site gains contribute to a particular development according to location.

Design a practical habitat management and monitoring plan

The habitat management and monitoring plan should explain how each target habitat will be established, maintained and assessed. It needs enough detail for those undertaking the work, not just those reviewing the calculation.

Cover the establishment programme, grazing or cutting regimes, invasive species control, access arrangements and any water-level management. Specify monitoring methods, reporting intervals and the habitat-condition milestones used to judge progress. Include corrective measures for foreseeable problems such as failed establishment, scrub encroachment or inappropriate grazing pressure.

Budget for professional monitoring as well as physical management. Machinery, livestock handling, fencing, replacement planting and record keeping can all affect delivery. Responsibilities should remain clear if contractors change or the land is transferred.

Secure the habitat bank through the correct legal route

Off-site gains must be legally secured through a section 106 agreement or conservation covenant. A section 106 agreement involves the relevant planning authority; a conservation covenant is agreed with a designated responsible body. The appropriate route depends on the circumstances and the organisations willing to enter the agreement.

The documents should define the land, habitat commitments, management period, monitoring, reporting and enforcement arrangements. Off-site gains must be maintained for at least 30 years following completion of the relevant habitat enhancement works. Where a bank has multiple parcels or delivery stages, make the applicable dates and responsibilities explicit.

Habitat works can also raise separate consent questions. Ponds, engineering works, changes affecting drainage or activities near protected sites may need further approvals. Legal security for BNG does not itself grant every other permission required.

Register gains and manage allocations accurately

An eligible off-site gain site must be entered on the biodiversity gain site register operated by Natural England. Registration requires supporting legal and habitat information. It is an essential compliance step, but it does not certify market demand or guarantee sales.

When gains are committed to a development, the relevant allocation must also be recorded. The developer uses the allocated gains in its biodiversity gain plan, submitted for approval by the local planning authority before commencement where the statutory condition applies.

Maintain a clear ledger of available, reserved and allocated units. Different contracts should not commit the same gain twice. Sales documentation should identify habitat types, quantities, delivery evidence and the responsibilities that remain with the habitat-bank operator.

Test the business case before committing the land

Assess local demand by habitat type, not simply by the number of nearby planning applications. Developers must first follow the biodiversity gain hierarchy; their remaining deficits may not match your proposed supply. Statutory biodiversity credits are a government last resort, not another name for habitat-bank units.

Compare realistic sales scenarios with establishment costs, legal work, registration, long-term management and monitoring. Allow for delayed sales and remedial works. A well-designed bank should remain manageable even if transactions arrive more slowly than expected. To explore a potential site, contact our team with its location, approximate extent, ownership position and existing habitat information.