SME developers are bracing themselves for huge extra costs when new rules requiring a housing or commercial project to increase biodiversity by ten per cent go live in November.

The National Federation of Builders, NFB, had hoped the government would raise the limit of nine to 39 new homes for defining a small site allowing greater use of a digitised habitat metric.

NFB housing and planning policy head Rico Wojtulewicz said: “We believe the government has missed a trick by not taking up our offer to extend the small sites metric to medium-sized sites of fewer than 40 homes and trailing it during the transition period, alongside the targeting of local species.”

The NFB has argued that the development of up to 40 homes would have been large enough to see if a particular biodiversity initiative such as installing bat boxes worked.

“We would like to have made it world-leading. The government doesn’t seem to understand that we are part of the solution,” said Mr Wojtulewicz.

Raising the cap for small sites to 39 homes would have allowed a significant number of SMEs to adopt the digitised habitat metric rather than employing an ecologist to assess biodiversity net gain.

The expenses associated with adopting the new rules are significant, for example, a developer building 40 new homes could face extra costs in the region of £200,000.

Property finance intermediaries Hank Zarihs Associates said the increases were massive and development finance lenders were concerned this would deter SMEs from building in rural areas.