Section 106 Scrapped?

Section 106 contributions could be scrapped for self-builders under plans outlined by a new government proposal – potentially saving £10,000s in planning fees.

Hot on the heels of the announcement that individuals building their dream home are now exempted from the Community Infrastructure Levy (CIL) tax, the government intends to help even more self-builders across the UK by excluding them from the burden of Section 106 (S106) charges.

The proposal is part of the Planning performance and planning contributions consultation, published yesterday. It suggests a 10-unit threshold for Section 106 affordable housing contributions. Smaller developments and one-off self-build homes would therefore become exempt from this portion of the charge.

What is Section 106?

Section 106 is a piece of legislation that allows local councils (in England & Wales) to charge a development fee as a ‘planning obligation’ attached to a piece of land. These fees are frequently inserted to planning permissions for housing and can often run into the £10,000s. The money is levied in order to fund affordable housing and local infrastructure.

The charge is the precursor to the Community Infrastructure Levy and is due to be phased out by April 2015. In the meantime, it remains a threat to the viability of self-build projects where the councils aren’t using CIL.

The government wants to review Section 106 charges to bring them into line with the new CIL exemption.

Why only ‘affordable housing’ contributions?

Government research has found that the ‘affordable housing’ justification accounts for around half of the value of all planning obligations. The Department for Communities & Local Government appears to have decided to focus on tackling this element of the contributions, although the consultation does invite views on a possible extension of the exemption to other tariffs and justifications for planning obligations.

The move should therefore remove a large part of the burden of Section 106 charges. However, it may still leave self-builders exposed to the elements of S106 that apply to ‘infrastructure’ improvements. These are charged on a proportional basis, relative to the impact of the development.