1 December 2014
People embarking on self and custom build projects are set to save thousands of pounds from the cost of delivering them under new measures confirmed by the Communities Secretary.
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Eric Pickles announced that Section 106 (S106) charges for people wanting to build their own home or developers looking to build a small number of properties (10 homes or fewer) are to be scrapped. The reforms, originally announced in February, will come into force immediately and are likely to help increase both house building and housing supply, and lower the construction cost of new build housing and home improvements.
The exemption on the charges will also be applied to the building of extensions and annexes, and those who wish to bring redundant buildings back into use.
S106 fees are negotiated between an individual/company building a home and the local authority to ensure that the project pays a contribution towards the local infrastructure that supports it; this could be anything from a new road to a school or clinic.
A number of councils have applied S106 charges which have made the development of homes unviable, such as a £32,000 charge that would be required to build a self build 2-storey 3-bedroom house in the New Forest, and a £20,000 charge to build 2 modest sized homes in Andover.
In March, the Government embarked on a consultation exercise asking for views as to how this might work before publishing its response. In turn, the National Custom & Self Build Association (NaCSBA) – which campaigned for the exemption – provided its response to the process.
Remarking on the measures, the Communities Secretary said: “This will be a massive boost to the self build and custom build sector. Overnight in many parts of England, it will be cheaper to build your own home.”
Adding to to Mr Pickles’ comments, NaCSBA Chair Michael Holmes said: “To effectively tax people wishing simply to provide a home for their family with none of the profit motive enjoyed by developers was always, in our opinion, a misuse of Section 106s. We can expect to see many more self builds start as a result of this announcement.”
In a written statement to parliament today, the Housing Minister Brandon Lewis expanded on the measures to actively support the custom and self build sector and “help hard-working people get the home they want by reducing disproportionate burdens on developer contributions.”
These measures follow the exemption of self builders from paying the Community Infrastructure Levy (CIL) announced earlier this year. Before the change excessive CIL payments meant that in some parts of London an average sized self build house could be hit with up to £43,700 of charges and outside London up to £11,400 in levy charges were being imposed. CIL payments contribute in a similar way to S106 but do not need to be used for providing infrastructure on the site they are collected from.
Guidance on planning obilgations is available via information published on the Planning Portal website.
