Biodiversity Net Gain for landowners: key legal considerations before committing land

14th May 2026

Author: Rebecca Jepson

Biodiversity Net Gain (BNG) is now firmly established within the development and land management landscape in England. While much of the discussion around BNG has focused on developers and planning requirements, many farmers, estates and rural businesses are now exploring whether land could be used for habitat creation, biodiversity units and wider environmental diversification opportunities.

As we explored in our previous article on Biodiversity Net Gain: key considerations for developers and landowners, the introduction of mandatory BNG requirements has created new opportunities for landowners, alongside significant long-term obligations.

For some landowners, Biodiversity Net Gain agreements may offer a long-term income opportunity. For others, they may form part of a broader estate management or environmental strategy alongside existing farming operations and stewardship schemes.

However, while the commercial opportunities can appear attractive, BNG agreements can involve significant long-term legal and practical commitments. Rebecca Jepson, head of Butcher & Barlow’s Agricultural & Rural Affairs Team, explains why landowners should carefully consider how a scheme could affect the future use, value and management of their land before entering into any arrangement.

Recent government proposals affecting smaller development sites and off-site biodiversity requirements have also prompted many landowners to reassess how Biodiversity Net Gain projects fit within wider estate and business planning.

What is Biodiversity Net Gain?

Biodiversity Net Gain is a legal requirement for most developments in England to leave biodiversity in a measurably better state than before development takes place.

In many cases, developers are unable to achieve the required biodiversity improvements within the development site itself. As a result, they may look to landowners to provide off-site biodiversity units through habitat creation or enhancement projects elsewhere.

This increasing demand for environmental land management projects also links closely with the wider development of Local Nature Recovery Strategies for farmers and landowners, which are expected to influence future habitat creation and biodiversity priorities across England.

This has led to growing interest in:

• habitat banks
• off-site biodiversity schemes
• environmental land management projects
• long-term biodiversity agreements

For landowners, this can create new diversification opportunities. However, it also introduces significant legal obligations which should be carefully considered before any agreement is signed.

How long do Biodiversity Net Gain obligations last?

One of the most important features of a Biodiversity Net Gain agreement is the length of the commitment involved.

Most BNG schemes require habitats to be maintained for at least 30 years. These obligations are commonly secured through conservation covenants or section 106 agreements which may be registered against the title to the land.

This means landowners may be committing future generations to specific land management obligations long after the original agreement is entered into.

Before proceeding, landowners should understand:

• what habitat management work will be required
• who will monitor compliance
• what happens if biodiversity targets are not achieved
• whether additional costs could arise in future
• how ongoing management obligations will be funded

A scheme which appears attractive initially may become restrictive if the long-term commitments are not properly understood from the outset.

Can Biodiversity Net Gain affect future development potential?

Landowners should also carefully consider how a BNG agreement could affect future plans for their estate or farming business.

Once land is committed to biodiversity enhancement, there may be restrictions on how it can be used during the term of the agreement. This can affect:

• future development opportunities
• agricultural operations
• refinancing arrangements
• estate restructuring
• succession planning

This is particularly relevant where land may have strategic development potential in the future, including land located near villages, settlement boundaries or proposed growth areas.

In some cases, land committed to habitat creation today may become difficult to use for alternative purposes later.

Some landowners may also be considering temporary environmental projects or shorter-term land use changes. However, care should be taken where temporary arrangements could later affect future development opportunities or create unintended long-term obligations.

Habitat banks and biodiversity units: what should landowners know?

Habitat banks and biodiversity units have attracted significant attention across the rural sector, particularly as developers seek off-site solutions to meet BNG requirements.

As discussed in our article on Local Nature Recovery Strategies for farmers and landowners, projects located within strategic nature recovery areas may become increasingly attractive to developers seeking off-site biodiversity solutions.

While Biodiversity Net Gain may create new diversification opportunities, the market remains relatively new and continues to evolve. Changes to exemptions, development policy and environmental priorities may all affect future demand and pricing for biodiversity units.

Recent government proposals to exempt very small development sites from mandatory Biodiversity Net Gain requirements may also affect future demand for off-site biodiversity units in some areas. While the proposals are still progressing through the legislative process, landowners considering habitat banks or long-term biodiversity projects should be cautious about relying solely on current market demand.

Landowners considering habitat banks or environmental diversification projects should therefore avoid making decisions based solely on current market conditions. Instead, it is important to consider:

• whether projected income is realistic
• how long demand is likely to remain strong
• what ongoing management costs may arise
• whether the agreement fits with wider business objectives
• how the arrangement may affect future generations

Environmental diversification can present genuine opportunities, but long-term decisions should be approached carefully.

Existing tenancies and occupation arrangements

Many rural properties are occupied under agricultural tenancies, grazing licences or informal farming arrangements.

Before entering into a Biodiversity Net Gain agreement, landowners should establish:

• who has legal control of the land
• whether third-party consent is required
• whether existing agreements permit environmental schemes
• whether compensation rights could arise

Changes to land use may also affect rent reviews, subsidy arrangements or wider farming operations.

Early legal advice can help identify potential issues before agreements are finalised.

Lender consent and secured borrowing

Where land is subject to mortgages or secured lending, lender consent may also be required.

Some lenders may have concerns where long-term environmental obligations affect the future value or flexibility of land. Restrictions registered against title may also influence refinancing or future borrowing arrangements.

Discussing proposed schemes with lenders at an early stage can help avoid delays later in the process.

Tax and succession planning considerations

Tax treatment remains an important consideration for landowners exploring BNG projects.

Depending on how a scheme is structured, questions may arise around:

• agricultural property relief
• business property relief
• capital gains tax
• income treatment of biodiversity payments

For family farms and estates, it is equally important to consider how long-term environmental commitments align with succession plans and future business objectives.

A Biodiversity Net Gain project should form part of a wider strategic discussion rather than being viewed in isolation.

Why early advice matters

Biodiversity Net Gain agreements can involve complex legal, commercial and practical considerations. Every landholding is different and arrangements which work well for one estate may not be appropriate for another.

As the BNG regime continues to evolve, landowners should ensure decisions are based on careful consideration of both current opportunities and long-term implications.

Taking advice at an early stage can help protect flexibility, manage risk and ensure environmental projects support wider business and family objectives. You can also read our earlier article on Biodiversity Net Gain: key considerations for developers and landowners for further background on how the BNG regime operates in practice.

At Butcher & Barlow, our Agriculture & Rural Affairs Team works with farmers, estates and rural businesses on a wide range of land management, diversification and property matters.

To discuss any of the issues raised in this article, please contact a member of our Agriculture & Rural Affairs Team.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The information in this article was correct at the time of publication. The information is for general guidance only. Laws and regulations may change, and the applicability of legal principles can vary based on individual circumstances. Therefore, this content should not be construed as legal advice. We recommend that you consult with a qualified legal professional to obtain advice tailored to your specific situation. For personalised guidance, please contact us directly.