Planning Permission: Obligations

What are Section 106 Agreements?

A Section 106 is a legal agreement between you as an applicant seeking planning permission and your LPA, which is used to mitigate the impact of your new home on the local community and infrastructure. In other words, a new house will mean another car(s) on the roads and perhaps your children will attend nearby schools, putting a little more strain on local services. As such, Section 106 Agreements often require a financial contribution, made prior to the project starting — which can result in more upfront costs for self-builders.

Many self-builders have been fortunate enough to avoid Section 106 Agreements as their LPAs have only assigned them to applications for ten or more dwellings. However, where Agreements have been required for individual homes, financial contributions have varied considerably. During an investigation launched in April 2009, H&R discovered that contributions for building a four bedroom home ranged from £4,729 in Surrey Heath District to £16,035 in Reigate and Banstead Borough Council.

This is set to change, however, with the introduction of the Community Infra - structure Levy (CIL). The CIL aims to bring greater transparency to contributions made, with standardised charges for all new developments (including extensions) over 100m². As a representative from the Department for Communities and Local Government (DCLG) explains, “Rates will be published in a charging schedule, enabling developers to calculate their contribution. CIL is designed to capture the cumulative impact of development across an area, including that which results from single houses being built.” The CIL came into force in April 2010 and will not replace Section 106 Agreements, although these will be scaled back across the country by 2014, to reflect localised issues.

What will I have to pay?

What you’ll end up paying on a project is very much an unknown at present. In order to set their ‘charging schedule’, LPAs each have to prepare a development plan, which will be subject to independent examination — so it may be some months before charges are set. In addition, CIL charges will vary across the country, and could even vary between urban and rural areas within the same county, depending on local need.

However, self-builders who plan to build a replacement home could be in the best position, according to a representative from DCLG: “Where a new dwelling is built, CIL will be charged only on the net increase in development — so if a building were to be replaced by a self-build house of the same size, there would be no charge.”

An existing building must be occupied as a home for at least six months before demolition for such a deduction to be valid.

What else do I need to know?

While you’re unlikely to feel the effects just yet, don’t be alarmed if you automatically have to fill out a short form – ‘Community Infrastructure Levy Questions’ – as part of making a planning application online. The Office of Fair Trading has also recommended that CIL payments from some self-builders should be made payable at the end of a project to ease upfront costs.

Further Advice on Planning

• Planning Permission: Making an Application
• Planning Permission: Permitted Development
• Planning Permission: The Party Wall Act

Further reading:

• Find out more about Section 106 in the Discussion Forum
• The Costs of Plots