Section 106 Exemption Confirmed

Self builders are set to save £1,000s thanks to a recent decision on Section 106 Planning Obligations. On 11 May the Court of Appeal Civil Division reversed last year’s High Court decision to quash the exemption from s106 planning obligation payments for small sites.

A timber clad self build Baufritz house
Self builds like this Baufritz home would be liable to hefty charges had the High Court not ruled in the favour of those looking to build their own homes

The exemption, first introduced by Minister for Housing and Planning, Brandon Lewis MP, by Ministerial Statement on 28 November 2014, freed self builders from the unpopular s106 planning obligation payments which required them to divert £10,000s from their budget for a new home, into a payment towards roads, schools, affordable housing and other local authority infrastructure projects.

NaCSBA, the National Custom and Self Build Association, campaigned for the exemption on the grounds that the payments – designed to mitigate the impact of major development on local infrastructure – were disproportionate to the impact of small developments, especially single self build homes and failed to recognize the exceptional costs of developing a small site.

The exemption, applied to sites in England of 10 new homes or less (five in designated rural areas), was welcomed by self builders and small housebuilders alike. Some local authorities, however, disagreed with the exemption and on 31 July 2015, the judge in a High Court case brought by two neighbouring authorities, Reading and West Berkshire, found the exemption unlawful, and it was quashed just eight months after its introduction leaving many self builders in indefinite limbo.

The High Court Judge’s ruling clearly contradicted the intentions of the Government and its stated commitment to boost housebuilding, help smaller local housebuilders and double the size of the self build sector to 20,000 homes a year by 2020. NaCSBA immediately launched a campaign for the reintroduction of the exemption and in August 2015, DCLG was granted leave to appeal. The High Court’s decision to quash the exemption has been reversed with immediate effect. The Government is expected to update its guidance accordingly.

“NaCSBA welcomes the Court of Appeal ruling,” says Chair, Michael Holmes. “This exemption, together with the existing exemption from the Community Infrastructure Levy (CIL), brings us one step closer to NaCBSA’s stated aim to make a high quality, sustainable, affordable individual home an option for the many and not just the few.

“Despite this victory for those who want to build their own home, it is still possible that the original appellants may seek leave to appeal to the Supreme Court.”

What is Section 106

A Section 106 is a legal agreement between an applicant seeking planning permission and the LPA, which is used to mitigate the impact of your new homes 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 could result in more upfront costs for self builders. Exemption was introduced for self builders in November 2014, but some councils were quick to seek to challenge this decision.