Small brownfield sites just got cheaper to build. Your appraisal is out of date.
The Budget exempts smaller brownfield developments from Biodiversity Net Gain. A site that did not stack up in the spring might stack up now, and that is a reappraisal job rather than a headline.
Buried well below the tax measures, the Budget exempts smaller brownfield developments from Biodiversity Net Gain requirements. The stated aim is to make them cheaper and simpler to build.
It will get a fraction of the coverage the landlord measures get, and for a small developer it may be the most useful thing in the document.
What Biodiversity Net Gain was doing to small sites
BNG requires development to deliver a measurable improvement in biodiversity. In principle, reasonable. In practice on a small brownfield plot it has meant three things.
The actual figures vary enormously by site, which is part of the problem. What is consistent is that the burden falls disproportionately on small schemes, because there is no volume to spread it across.
The practical consequence: reappraise, do not assume
Remove a cost that does not scale down, and remove weeks from the programme, and the sites that change are the marginal ones. This is the real point.
Plots that were appraised earlier this year and set aside because the numbers were thin may now work. Not because land values moved or because build costs fell, but because a cost line and a delay came out of the model.
That is worth a deliberate exercise rather than a vague sense of improvement.
The supply side of this Budget is the part that helps
Taken together, the supply-side measures are more encouraging than the tax measures are discouraging, if you are building rather than holding.
A ten-year £40bn programme matters to small developers less as a direct funding route and more as a demand signal. A registered provider with a decade of visible funding is a different counterparty to one working year to year, and that changes what a forward sale or a section 106 disposal is worth as an exit.
What changes in the funding conversation
Two things, both in the borrower’s favour.
First, a shorter programme is a cheaper facility. Development finance is priced over a term, so taking a seasonal survey delay out of the schedule reduces the interest rolled up over the life of the loan. That is a direct saving, not a modelled one.
Second, a cleaner appraisal is easier to underwrite. Fewer contingency lines and fewer unresolved consents means fewer questions and a faster credit decision. On small sites, where the margin is thin and the lender is scrutinising every assumption, that matters more than people expect.
The exemption applies to smaller brownfield developments. The precise size threshold and commencement date should be confirmed against the Budget documents before any site is committed on the strength of it.
“This is the kind of change that quietly moves the margin on a small scheme without anyone writing a headline about it. If you shelved a brownfield plot this year because it was close but not quite there, it is worth running the numbers again this month.”