Self-Build & S106 Contributions

Build It expert Mike Hardwick
by Mike Hardwick
4th December 2015

I previously wrote about the backlash from local planning authorities (LPAs) regarding a Department for Communities & Local Government (DCLG) directive, which asked councils to exempt developments of 10 houses or less from Section 106 tariffs.

This policy guidance was just that – guidance – and had no basis in law. At the time, I raised concerns that we could expect legal challenges to the government’s position on the grounds that it was adversely affecting affordable housing provision.

I was hoping that when this happened, the law would rule in our favour and that Section 106 contributions would no longer apply to self and custom builders. Well, the first cases have been heard in the High Court, but the results aren’t what I was hoping for.

The West Berkshire and Reading Borough councils were quick off the mark to challenge the directive, arguing that their right to raise income for affordable housing and critical infrastructure trumped the need for developers to avoid paying.

They must have been delighted when Mr Justice Holgate quashed the new policy, labelling the consultation that informed the exemption “unfair and unlawful” and saying that it failed to take into account “obviously material” considerations.

The government has therefore had to withdraw the relevant paragraphs from the National Planning Policy Framework document, so they can no longer be applied. This means that we can now expect Section 106 payments to appear once more as part of our planning applications.

The ruling came as a surprise to me and I understand that the government is appealing the decision. However, this case shows that if you want to change policy in this way, simply issuing guidance and hoping that everyone adheres to it is never going to have the same effect as introducing legislation.

Self-builders have suffered here because they’ve been lumped into the same bracket as medium-sized developers. I’d argue the vast majority of self-builders aren’t in it to turn a profit – they just want a home that’s right for them.

Usually on tight budgets, these are people who have to fund projects through personal savings and finance. I believe the addition of a Section 106 levy on these individuals is unfair. However, a developer constructing 10 homes can more easily absorb these fees as part of their overall costs and recoup the money through the final selling price.

Of course, these contributions have to come from somewhere – and if you ask the voting public, or indeed a judge, to prioritise developer margins over affordable housing provision, you know what the answer will be.

So, it’s back to the drawing board for the DCLG and a case of one step forward, two steps back for self-builders.

One Comment

  1. NMHARLEY says:

    What is expected for a 2 bed
    What is expected for a 2 bed In Hart?
    first application was turned down but would have been only about 7k last Sep’t

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