Biodiversity Net Gain (BNG) offers Cambridgeshire landowners new revenue opportunities through biodiversity unit generation, although this places long-term environmental responsibilities directly on them. For the vast majority of developers, it requires a mandatory 10% uplift in biodiversity and often sees them looking to enter into arrangements with local landowners. Together, both groups now shape how the county plans, invests in and manages land. As well as direct approaches by developers, some specialist companies look to work with landowners to create the units to market to developers.
In Cambridgeshire, where development demand remains high and rural landholdings vary widely, BNG serves as a strategic economic and land use tool rather than simply a planning condition.
A county responding to change
Since BNG became mandatory for most developments in February 2024, all major and small site planning applications must show at least a 10% biodiversity uplift using DEFRA’s statutory biodiversity metric.
Local authorities continue to adopt updated tools and guidance, including improvements from 2024 and 2025 and stronger alignment with Local Nature Recovery Strategies.
What this means for landowners
New income through biodiversity units
BNG creates a growing market in which landowners register land as a Biodiversity Gain Site and sell offsite biodiversity units to developers. All eligible sites are listed on the Biodiversity Gain Site Register.
According to a DEFRA sourced dataset, more than 7500 hectares of habitat belong to the national register, showing strong demand for units.
For many Cambridgeshire estates, especially those with lower grade arable land, this creates a valuable opportunity to diversify income.
Longterm stewardship comes with commitments
Landowners maintain BNG habitats for at least 30 years, so it is important that they are clear on the costs they will be responsible for over this long period. The use as habitat can also restrict future land-use choices. These commitments carry weight in fast-growing areas such as Cambridge, Ely, Waterbeach and Cambourne, as well as along the Cambridge to Oxford corridor.
Practical challenges
Many landowners say they struggle to understand the biodiversity metric and to manage monitoring and legal agreements. They often rely on early engagement and professional advice to navigate this complexity.
Advantages for landowners
- Landowners generate new revenue by selling biodiversity units on registered BNG sites.
- They repurpose low-grade or marginal land for habitat creation while still securing profit.
- Collaboration opportunities with developers, charities and environmental bodies help reduce delivery risks and encourage best practice.
Disadvantages for landowners
- A 30-year habitat commitment limits future development options.
- Ecological assessments, site registration and long-term monitoring bring upfront costs and administrative complexity.
- Evolving guidance can create uncertainty and hesitation when entering agreements.
- Some estates face tension between BNG opportunities and long-term land promotion strategies.
Why BNG can also be advantageous from a tax perspective
Although tax treatment depends on individual circumstances, several features of BNG can work in favour of landowners:
-
Ability to treat BNG proceeds as trading income
BNG requires landowners to create a new asset – the biodiversity unit – and sell it for profit. Tax specialists highlight that this has “many hallmarks of trading income,” rather than a capital disposal, which can benefit landowners who can offset expenses through their business. Care is needed when considering the timing of when the BNG credit receipts are taxed, because of the long-term nature of the habitat maintenance.
-
Capacity to deduct long-term management costs
The 30-year habitat management obligation generates ongoing costs. Landowners can often offset these against BNG income, reducing net taxable profits. Again, the accounting and tax treatment needs careful consideration for each project.
-
Potential preservation of inheritance tax reliefs
Where BNG activity integrates into an existing rural business, land may still qualify for Agricultural Property Relief or Business Property Relief, strengthening long-term estate-planning positions. There is, of course, the reduction in the generosity of BPR and APR from 6 April 2026 to consider.
-
VAT recovery on BNG-related expenditure
If the landowner operates as a VAT registered business, VAT on habitat creation costs ought to be reclaimable because BNG unit sales typically sit within the scope of VAT .
-
Ability to enhance natural capital without triggering CGT
BNG agreements add value to the land by improving its natural capital but rarely involve selling the land itself. This means landowners can monetise the value uplift through unit sales without triggering capital gains tax on the land. Landowners may however in some cases grant a lease over the land to another party who will create the units, and the capital gains tax position in those cases needs to be considered.
Implications for commercial developers
Developers submit a Biodiversity Gain Plan with each relevant planning application. If they cannot achieve improvements on site, they buy offsite units or rely on statutory biodiversity credits as a last resort.
Developers working in Cambridge and surrounding areas often turn to local landowners to meet BNG obligations where constrained sites and high land values limit onsite opportunities.
Advantages for developers
- Clearer environmental requirements improve planning certainty and transparency.
- Developers access a growing market of offsite units, which simplifies compliance for constrained sites.
- Joint environmental projects strengthen relationships with landowners and local communities.
- BNG helps developers demonstrate nature positive development and strengthen ESG performance.
Disadvantages for developers
- Developers face higher project costs when they buy biodiversity units, statutory credits or deliver habitat directly.
- Biodiversity assessments and reporting introduce additional administrative and technical work.
- Offsite unit shortages or limited planning capacity can slow project timelines.
- Developers who deliver their own habitats assume long-term environmental liabilities.
Growing collaboration
BNG supports stronger collaboration between landowners, developers, environmental groups and local authorities.
-
Estate and developer offsite habitat partnerships
Rural estates partner directly with developers to create habitat banks. These arrangements include long-term covenants or leases, upfront unit purchases and annual stewardship funding, which work well for commercial schemes with limited onsite space.
-
Multi-landowner habitat corridors
Landowners along river corridors could be involved in coordinated habitat creation as part of wider Nature Recovery Network priorities. These connected river systems act as ecological corridors and support landscape scale recovery, offering developers attractive, high quality offsite BNG opportunities.
-
Partnerships with environmental organisations
Landowners team up with wildlife trusts and ecological charities to design, monitor and maintain BNG habitats. These partnerships reduce administrative workload, strengthen compliance and improve long-term outcomes.
-
Developer funded wetland and meadow creation
Commercial and logistics developers invest in offsite wetland and meadow creation led by local estates. These projects improve floodplain wetlands, expand wildflower meadows and create hedgerow networks, while offering wider benefits such as flood mitigation and better landscape character.
A more integrated approach to land use
BNG encourages more integrated and long-term land use planning across Cambridgeshire. Growing expectations for environmental accountability make early and coordinated planning essential.
Conclusion
BNG shapes land use decisions for both landowners and developers in Cambridgeshire.
- Landowners create new revenue streams but take on long term land commitments.
- Developers face higher planning expectations but benefit from clearer rules and access to local habitat partners.
- The county moves toward more integrated, nature positive development supported by a rapidly expanding biodiversity market.
How PEM can help
The PEM property team can guide you through the implications of BNG for your land or development projects, helping you understand your options and take practical steps to protect and enhance your position.
Join us at a Commercial Real Estate & Landowner Seminar 2026.
We are hosting a Commercial Real Estate & Landowner Seminar with Birketts, on 6 May at The Moller Institute. Hear from PEM and Birketts property experts as well as an informative panel session that includes: Kathryn Chapman from Innovate Cambridge and Dan Thorp from Cambridge Ahead . For more information and to register please click here. Please note that spaces are limited.
