A Section 106 is an agreement by law between you, the self-builder applying for planning permission, and your Local Planning Authority (LPA). The Section is used to mitigate your new home’s impact upon the local infrastructure and community at large. What this means on a basic level is that with a new house comes additional cars on the roads, and possibly additional children to be placed in schools, both of which will put more of a strain on the local services. Section 106 Agreements will usually make necessary some financial contribution to be made before the project begins. This can result in more upfront costs for the self-builder.
A lot of self-builders have been lucky in avoiding Section 106 Agreements due to their LPAs only assigning them to applications to create ten or more dwellings. However, in cases where Agreements have been required for single dwellings, the necessary financial contributions have varied as much as £12,000 between councils.
This should be changing, however, as the Community Infrastructure Levy (CIL) is introduced. This aims to make contribution rates much more transparent and set standardised charges across the country for all new developments of more than 100 squared metres.
Section 106 Agreements: What will they cost you?
It is difficult to predict what any one project could incur in Agreement costs. They can vary not only from one part of the country to another but also between rural and urban areas within one county.
Self-builders who intend to build a home which will replace an older dwelling could be in the best position as where a new dwelling is built, CIL will only be charged on the net increase in the size of the development. Therefore, if a building is replaced by a self-built house of the same size, no charge would be enforced.
Beware an existing building must have been occupied for a period of at least six months before demolition is allowed for such a deduction.
You are not likely to feel the effects of Secti0n 106 Agreements straight away, but you may be required to fill out a short Community Infrastructure Levy Questions form as part of your online planning application. It has also been recommended by The Office of Fair Trading that CIL payments being made by self-builders should only be required at the end of the project in order to ensure upfront costs are kept within a manageable margin.