Planning: Hidden Costs

As well as standard application fees, several other costs are involved in planning, says Mike Dade
by Mike Dade
26th November 2012

Getting planning permission for a new house used to involve no more than providing plans, filling in forms and signing a small cheque for a few hundred pounds worth of application fees. But these days you’re likely to get caught for pre-application charges and ‘developer contributions’ as well. The exact sums for these vary from council to council.

As is so often the case with the planning regime, then, the overall picture on costs is far from clear. So, what are these various payments for, when might they be charged, and, importantly, are there any ways around them?

Pre-application advice

Pre-application fees are charged by some councils in return for informal advice given by planning officers prior to the submission of an application. The costs vary, but are typically no more than a few hundred pounds. Advice might be given in writing, or via a meeting. One of the major benefits of the ‘pre-app’ process is getting the council to confirm what reports and documents they expect to be submitted with the application and whether and when ‘contributions’ have to be paid.

Although pre-app charges are a nuisance, they’re actually a very tiny part of the overall project budget, and can speed up the application process as well as help you to avoid unpleasant surprises.

Planning application fees

At the moment, application fees are set on a nationwide basis. In England, they’re currently £335 for a detailed application for a single house and £335 per 0.1 hectare of plot for outline applications. Part of the Government’s localism agenda involves a move towards enabling councils to set their own application fee levels. It would be surprising if cash-strapped councils don’t push their fee levels up.

Developer contributions

Councils’ approaches to contributions vary greatly. Some don’t charge any for single dwellings, others charge considerable sums, in excess of £10,000 in extreme cases. Such sums have serious budget implications and for plot purchasers, need to be taken into account in the offer you make for the plot.

When checking with your council about possible developer contributions, find out what any contributions are for and who is imposing them. This could be your district or borough council or it could be the county council. If there are payments to be made, find out under what policy the council intends to make the charge – they can’t just invent charges on an ad hoc basis. Often councils cover the issue of developer contributions in supplementary planning documents, or you might find policies in the Local Plan or Local Development Framework. Either way, read up on the detail, and ask the council for examples of schemes comparable to yours that have been granted planning permission recently. How much did they pay and for what?

Before we look at the all-important question of avoiding or minimising fees, it’s important to take stock of the mechanism for payment. This, in itself, has budgetary and timing implications.

One common route is that you make your planning application, and all being well, after about eight weeks the council resolve to grant you permission, subject to you entering into a legal agreement to pay specified contributions. This means you get an assurance you’ll get permission, but then have to engage a solicitor to sort out the legal agreement with the council. These agreements are also known as ‘planning obligations’ and ‘section 106 agreements’.

Not only will you have to pay your solicitor, but you’ll be expected to pay the council’s solicitor as well. The process can take anything from a few weeks to several months. Once the agreement is signed, your planning permission is sent to you. The payment itself might take place on signature or be triggered by the start of the works.

An alternative approach is for the council to ask you to sign what’s known as a ‘unilateral undertaking’ before the planning permission is issued and within the usual eight week period for a decision. The undertaking might require you to pay the contributions there and then, or at some specified later date. Some councils ask for payment on submission of an application, which is pretty onerous when you don’t even know if your application will succeed.

Note that many self-builders buy land that already has outline planning permission. If a payment has to be made, it might have been made at the outline application stage, so you might not have to pay anything more to get your detailed permission. Note too that, if you’re replacing an existing house, you generally won’t have to pay, as there’s no additional house and, therefore, no extra burden on local services etc. You might, though, have to pay something related to the increased number of bedrooms in the property if you’re replacing an existing home with a larger house.

Minimising payments

So, when a council asks for money, what can you do to reduce the burden? The answer depends on the purpose of the payment and the method of calculation. For example, if you’re converting a town centre industrial building into a luxury, one-bedroom executive apartment, you could legitimately question the need to contribute to local schools or children’s play space. After all, contributions are supposed to be directly related to the proposed development. Similarly, a contribution towards a parking scheme could be questioned if your proposed house has more than adequate parking within its curtilage. So, as a rule, don’t be afraid to question the council’s right to charge you.

Methods of calculating contributions are usually pretty simple, although some councils use very complicated computations and can’t even tell you how much they’ll ask for until the application has been submitted. Figures are often based on the number of units, which is, of course, one for most self-builders, or perhaps on the number of rooms or bedrooms per unit.

You can’t simply call a bedroom a study and expect the council not to spot the ploy. But you could opt for a two-stage build, perhaps subdividing rooms or even extending the property at a later date. An attic conversion, for example, might be omitted from the initial scheme, but added in later. Don’t get too caught up in such tricks for trying to avoid payments though, as the extra costs involved in a two-stage build could exceed any savings made.

If you think the council is acting unreasonably in charging you, or charging too much, you can always go to appeal. Unlike the council, an appeal inspector can’t allow an appeal subject to you signing a section 106 agreement. At appeal, planning permission is either granted or it isn’t.

Once your application has been running for over eight weeks, you can appeal against ‘non-determination’ even though the council might have decided to grant you permission, subject to a contribution. The appeal inspector then has to decide whether you should be allowed to build without making any payment. Appeal inspectors are likely to be more objective than councils in deciding whether a payment really does relate fairly to the proposed development or not. The downside is that there are time and cost implications of going to appeal.

The Government has recently stated that where new developments aren’t progressing because councils’ contributions are rendering them unviable, then councils should negotiate more realistic figures that enable the development to go ahead. Although this is aimed at larger housing sites, the sentiment applies to self-builders.

Community Infrastructure Levy

Finally, the Government has sought to simplify the whole contributions process via the Community Infrastructure Levy, or CIL. Adopting this procedure in favour of section 106 agreements is voluntary, and the CIL is still very much in its infancy. As with any Government tax, its provisions are complex, with reliefs and exceptions, including one which takes conversions out of the scope of the levy, as they don’t create new floorspace. Whether councils take up the CIL over the coming months, and whether it proves a help or a hinderance for self-builders, remains to be seen.

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