Self-build disposal restrictions
It is fair to suggest the new Labour Government's housing targets are ambitious, and whilst the proposed reforms to the NPPF will go some way to achieving these targets, it hasn't gone unrecognised that self-builds will also contribute.
But is it appealing? Yes, sure, who doesn't get excited by Kevin McCloud taking us on a tour of a property fit for a Bond villain, but let's talk about something more exciting that may temper that appeal: the law. Less Kevin McCloud - think more Rumpole of the Bailey. On this occasion, I want to talk more about the law regarding disposing of a self-build dwelling.
Is the development within an area where the Local Planning Authority are a Community Infrastructure Levy charging authority?
If yes, the development of a self-build will trigger the liability to pay CIL. A developer may, however, claim the self-build exemption to pay CIL (Reg 54A Community Infrastructure Levy Regulations 2010 (as amended)). Reg 54B(2) prescribes that any claim "must be made by a person who intends to build, or commission the building of, a new dwelling, and intends to occupy the dwelling as their sole or main residence for the duration of the clawback period".
In respect of the self-build exemption, the 'clawback period' is defined as "the period of three years beginning with the date of the compliance certificate relating to the relevant dwelling".
As such, if the developer has made a claim for the self-build exemption, it is indicated that they must occupy the dwelling as their sole/main residence for three years. A failure to do so would result in the CIL liability being payable (Reg 54D(2)).
What if the self-build development is not within an area where the Local Planning Authority are a CIL charging authority?
Firstly, the above exemption and rules relating to it are not applicable. As such, there are no statutory constraints on how long the developer needs to own/reside in the self-build dwelling before disposing of it.
Secondly, it is worth remembering that "self-build and custom housebuilding" is defined as "the building or completion by individuals, associations of individuals, or persons working with or for individuals or associations of individuals of houses to be occupied as homes by those individuals" (section 1(A1) Self-build and Custom Housebuilding Act 2015). "Home" is also defined as "the individual's sole or main residence" (section 1(6A)).
As such, whilst there is no time constraints on how long a developer needs to occupy the self-build dwelling for, in order to satisfy the definition of 'self-build and custom housebuilding', the dwelling should be occupied (at least initially) as a sole/main residence by the individual/association of individuals who built/completed the self-build dwelling or who appointed persons to do so.
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Almost always a planning obligation (either a section 106 agreement or, more commonly, a unilateral undertaking) will be provided to secure the development of the permitted dwelling is indeed as a self-build. When negotiating planning obligations with non-CIL charging local authorities, I have experienced some requiring the three year restriction on disposal - some even longer. Some clients are willing to accept this whereas others may be more reluctant owing to concerns regarding future finances or their own or their spouses mortality. How can a local planning authority enforce such an obligation where it is unviable for the individual(s) to remain?
The answer, in essence, is: with great difficulty. As well as complying with the statutory Regulation 122 tests, planning obligations need to be enforceable. It is arguable that a restriction on disposal is unenforceable. An Inspector in a recent appeal in Market Harborough agreed (note: in the context of the restriction being expressed as a condition, but the decision remains applicable):
"41. Secondly, if the LPA did not consider that the occupier was a person who had primary input into the design, and took enforcement action, in order to comply, the third party would have to get the person who built the house (and presumably sold it to them) to return to live in the property. It would be impractical and unreasonable to require this. In such circumstances, it is likely that enforcement action would also be unreasonable". APP/F2415/W/24/3338486
Some developers have taken a more pragmatic approach upon facing resistance from local planning authorities. In a recent appeal in Charnwood, the appellant provided a Unilateral Undertaking which required them to use the dwelling as their principal residence or to dispose of it to someone on the local authorities self-build register for a period of 5 years. The wording of the obligation remained in contention throughout the appeal. The Inspector dismissed the appeal and was not drawn to comment on the aspects given it's decision to dismiss (APP/X2410/W/24/3343390).
What next?
The position remains one the subject of negotiation between developers and local authorities. It is crying out for clarity, either by an Inspector or in the Courts. Will a purposive approach be taken - is it intended that the restriction arising from the self-build exemption should be applicable for developments in non-CIL charging authority areas?
I can certainly sympathise with such local planning authorities. It could currently be seen as an opportunity for developers to obtain consent for dwellings under the guise of a 'self-build' rather than be subject to the alternative market dwelling application process. Even if, as in the Charnwood appeal, an obligation was provided to ensure the dwelling was disposed of to someone on the local planning authority's self-build register, the dwelling will not strictly comply with the aforementioned definition of a 'self-build and custom housebuilding'.
The personal circumstances of some developers, however, would mean that any such restriction is possibly fatal to their scheme. It is for that reason why the Inspector in the Market Harborough appeal decided that such a restriction would be unenforceable. Local planning authorities need to be alive to that dilemma in the context of meeting their own housing targets too.
Pragmatism will undoubtedly be the outcome on the majority of schemes going forward until the position is clarified. That, however, will hinge upon the willingness of developers to be subject to a restriction (qualified or not) in order to get their scheme over the line.
You see: far more exciting than Grand Designs...
Associate Planner at Taylor and Hardy Limited
5 个月Interesting article - On the self-build BNG exemption issue, are you seeing any LPAs seek to control self-build through Section 106 as a means to control and prevent abuse of the BNG exemption or are you seeing LPAs simply accept that the retrospective application exemption for BNG simply creates a loophole that can be exploited i.e. if self-build dwelling approved with BNG exemption and delivered as non-self-build, there would be no recourse to secure BNG retrospectively.... We are currently reviewing options in relation to this issue i.e. conditions or S106 to secure self-build or simply use of an informative and pursuit of breach of mandatory BNG condition. Would be interesting in any insights that you may have on this matter. Thanks.
Urban Design and Planning Consultant
5 个月As with schemes of all scales often the initial applicant isn't the end user & with custom build poorly defined I hope that self build is accepted as route forward where the project is sold with planning to a self builder. I have one scheme at the moment where that seems to be being accepted and another where it was not being favoured. In essence Councils will often decide based on of they wish to support the scheme in principle in anycase. It's just another reason to refuse if not due to the BNG impacts.
Sheriff & Alderman
6 个月Interesting piece??
Director at Tetlow King Planning
6 个月This is a really interesting read Josh, thank you. We have experienced the same problem on a number of self-build sites - and yet there is absolutely nothing in the NPPF, PPG, legislation or regulation that supports an LPA trying to enforce any occupancy restriction on a self-build! In a CIL charging authority my view is that this sort of requirement is also not appropriate. In my view there is simply no justification. In policy, guidance or law for any authority to try to implement this approach. For example, what happens if someone HAS to sell within the 3-years? That could be due to illness, redundancy, or relationship breakdown by way of a few unexhaustive examples. In a CIL authority there’s a clear route through this issue. But if it’s secured by deed then there’s a big problem!
Chartered Town Planner - Director at Lavata Group Limited
6 个月Interesting article- I had heard of someone who undertook a self build but then passed away during the three year period which then triggered payment of CIL by his son. Also, wouldn’t restricting who can buy a self build (those on the register) impact the ability for a fair market value?