Natural capital after the Budget: what should landowners consider now?

The Budget, read alongside Growing Places: Mobilising private finance for local nature recovery, published on 26 October 2026, presents a mixed picture for landowners considering natural capital projects.

The paper sets out the government’s approach to increasing private investment in nature in England, including proposals to combine environmental payments, develop demand and strengthen market confidence.

Simplifying regulation is welcome, but investment also depends on ongoing demand, greater certainty over funding and rules that work in practice.

Biodiversity net gain: exemption for residential brownfield sites

The Budget’s planned biodiversity net gain exemption for residential brownfield sites up to 1.5 hectares in England will remove the requirement from qualifying developments. The implementation timetable is still to be confirmed.

The confirmation that Nationally Significant Infrastructure Projects will enter the regime from November 2026 restates existing policy, rather than providing an additional Budget-led boost to demand.

For landowners developing habitat banks, the more important question is what the brownfield exemption means for their potential customer base. Removing qualifying developments from biodiversity net gain requirements could reduce demand for certain off-site units in some areas. This makes a robust assessment of local demand increasingly important when considering new habitat projects.

Woodland carbon: an updated pathway needs explaining

The Budget’s reference to an “updated delivery pathway” for the Woodland Carbon Purchase Fund deserves attention.

It appears in the explanation of how department funding is being reprioritised to support the new housing equity-loan scheme, but does not explain what this means for the fund’s allocation, timing or structure.

Landowners considering carbon projects may have viewed the proposed fund as providing greater certainty when making long-term investment decisions as this is being designed to help ‘underwrite’ the marketplace. They will therefore want clarity on whether the updated pathway means a change in approach, a longer timetable or a different level of funding.

Combining payments: welcome clarity, but not unrestricted stacking

The 26 October Growing Places paper proposes principles for combining public and private environmental payments on the same land. These include clear attribution of outcomes and safeguards against double funding.

It also proposes measures that could constrain separate compensation claims for different outcomes delivered by the same project. These remain proposals rather than changes to existing scheme rules, and the paper states that they would not apply retrospectively.

This is an important area for landowners to engage with as the proposals develop. Greater flexibility could create opportunities to build more viable projects, but the detailed rules will determine which income streams can genuinely be combined.

New demand: looking beyond development

Growing Places sets out a broader role for nature markets in areas including water quality, water resources and flood resilience.

It identifies competitive procurement from local nature service providers as the preferred route for securing conservation measures under the Nature Restoration Fund. It also describes £300 million committed to standalone natural flood management schemes through to 2036.

For landowners, catchment partnerships and collaboration with neighbouring farms may therefore become increasingly important routes to market. Individual carbon and biodiversity projects will continue to have a role, but emerging opportunities could increasingly reward projects operating at landscape or catchment scale.

Collaboration may improve the scale and environmental value of a project, but it can also introduce additional questions around governance, responsibility, the allocation of income and long-term land management obligations. These matters will need to be resolved at an early stage if collaborative projects are to attract investment.

Farm finance and market confidence

The paper describes a new private finance taskforce and the proposed Soilshot programme, focused on investment in sustainable farming and soil health.

A call for evidence on a common regenerative agriculture code or standard is planned for 2027. The paper also outlines work towards a voluntary, industry-led Environmental Market Governance Scheme, with Defra funding the initial design work.

These are constructive steps. Greater consistency and oversight could make it easier for buyers and investors to assess environmental claims and compare projects.

However, standards will need to build confidence without making participation disproportionately complicated or costly. Smaller landowners and farming businesses may struggle to enter the market if assurance, monitoring and reporting requirements become too burdensome.

The success of these initiatives will therefore depend not just on the quality of the standards, but also on whether landowners can implement them at a proportionate cost.

Better systems, not just new technology

The Budget explored the better use of technology, potentially including AI, and how it could help simplify environmental regulation, although the Budget stops short of specifying how.

Growing Places is more explicit. It identifies AI and remote monitoring as possible tools for environmental monitoring and assurance, with opportunities for wider piloting as regional water planning rolls out from 2027.

Following the delivery challenges experienced with the latest Sustainable Farming Incentive round, improvements to the underlying systems and administration would be particularly welcome.

For farmers and landowners, the test will not be the technology itself, but whether it helps create simpler and more reliable processes in practice. New monitoring tools will only build confidence if they are supported by clear guidance, functioning systems and accessible routes for resolving problems.

What should landowners consider now?

The Budget and Growing Places provide useful indications of the government’s direction of travel, but many of the measures that will affect the commercial viability of natural capital projects remain under development.

Before entering a new arrangement, landowners should consider:

• The likely source and durability of demand for the environmental outcomes being created,
• Whether different public and private payments can be combined under the applicable scheme and contract rules,
• The length of the commitment and its effect on future land use,
• The cost of monitoring, verification, registration and ongoing management,
• How income, obligations and liabilities will be allocated where projects involve neighbouring landowners or catchment partnerships,
• The interaction with existing agricultural, tenancy or development arrangements,
• The tax treatment of payments and expenditure, and
• How the project fits with the estate’s wider commercial, ownership and succession plans.

The emergence of new standards, governance arrangements and technology may help the natural capital market mature. However, landowners should avoid treating policy ambition or prospective funding as a substitute for a viable commercial structure.

How Saffery can help

Natural capital markets continue to evolve at pace, and the Budget and Growing Places proposals reinforce both the opportunities available to landowners and the importance of assessing projects on their long-term commercial merits.

Our natural capital and rural specialists work with landowners, farmers and estates to assess natural capital opportunities, including the interaction between environmental income streams, existing land use, tax, business structures and longer-term succession plans.

We can help landowners understand the financial and tax implications of a proposed project, consider how different income streams and contractual commitments interact, and assess how the opportunity fits alongside the wider objectives of the farm, estate or family.

If you’re considering a biodiversity, woodland carbon or wider natural capital project, or want to understand what these developments could mean for an existing project, please get in touch with Peter Harker, Head of our Natural Capital team.