NaCSBA’s Consumer Representative Mike Hardwick answers your questions on Section 106
07 October 2016
If you’re embarking on a self build project and are confused about what Section 106 is, NaCSBA’s Consumer Representative Mike Hardwick is here to help. Find out what your obligations are in Mike’s expert Q+A.
Q: What are Section 106 obligations and how do they effect self builders?
A: Section 106 contributions (S106) are planning obligations set by local authorities in the form of private agreements made between themselves and developers. They can be attached to a planning permission to make acceptable developments that would otherwise be unacceptable in planning terms. They can take various forms, but for self builders they usually appear as a demand for fees to offset anything from affordable housing to local amenities, like play parks or environmental projects. S106 contributions are often in the tens of thousands of pounds. They have been around for many years and are routine for developers who can factor the S106 element into the sale price of the finished house, but for self builders, the cost comes straight out of their (usually limited) build budget and in some cases, can make the project financially unviable.
Q: Weren’t the rules changed in 2014?
A: In November 2014, the then Secretary of State for Communities and Local Government, Eric Pickles, issued a ministerial statement to local authorities requesting that developments of 10 homes or fewer (5 in rural areas), which included self builders, be exempted from S106 – and for a brief period, this was the case. Importantly, this request was exactly that, a request, so not enshrined in law, and a number of local authorities challenged the idea stating that their need for affordable housing contributions outweighed the needs of individual self builders. In the High Court, Mr Justice Holgate quashed the Secretary of State’s decision to adopt the new policy statement labelling the consultation “unfair and unlawful” and failing to take into account “obviously material” considerations. The Government therefore had to withdraw the relevant paragraphs from National Planning Practice Guidance so they could no longer be applied.
Q: Has anything happened since then?
A: The DCLG immediately appealed the decision to the Supreme Court and after a long period of silence, the High Court decision was overturned on 11 May 2016, so the original ministerial guidance has now been reinstated. In essence, self builders can once again claim an exemption to S106 contributions. However, developments over 1,000sqm in total are still liable to S106, so all but the very largest self builds will remain exempt, as will custom build developments of up to 10 units where the total combined floor area of the units does not exceed the 1,000sqm threshold. Any S106 agreements imposed on planning between the two court rulings are also extant, so it may be necessary to challenge the imposition or in some cases resubmit the original planning application to gain exemption.
Q: How should prospective self builders approach their council to find out the size of contribution involved?
A: Self builders should decalre their self build status to their local authority when they submit their planning application. It is important not to confuse S106 obligations with the Community Infrastructure Levy (CIL). Self builders have a legal exemption to CIL and must submit Form 7 (Part 1) from the Planning Portal with their initial application. By doing this, they will also be highlighting their exemption from any S106 considerations.
