Legal Agreement to Self-Build

[Paul K]

The planning officer in charge of our application is recommending it for approval, albeit with various conditions, but he wants us to enter a legal agreement to affirm that it will be a self-build project. My understanding is that this is needed in order to guarantee that we will live there for the requisite 3 years and thus qualify for the self-build exemption from BNG & CIL obligations.

 

However, he has said that we can draw up the agreement.

 

Our planning consultant hasn't come across such a request before, so my questions are:

Does anyone have any experience of this, or have a template agreement for committing to a self-build? and

What clauses should we include/avoid when drawing up such an agreement? 

 

Any tips on this would be much appreciated.

[G and J]

Good grief that’s odd.

 

Is there even a legal definition of ‘self build’?

[nod]

There’s no such agreement needed 

The Cil is very clear 

If you sell the house within three years of sign off You pay the Cil If you are still living there after three years The cil is discharged Tell him you are fine and will do what everyone else does 

[ProDave]

Or rather than argue the case, just pen a letter saying that you are self building and intend to live there for a very minimum of 3 years.

 

It sounds like by sending this letter there will be no mention of CIL and all the hoops you have to go through for self builder exemption and none of the sully worry that if you do some "work" before the exemption is in place of having to pay the CIL.

[G and J]

52 minutes ago, ProDave said:

Or rather than argue the case, just pen a letter saying that you are self building and intend to live there for a very minimum of 3 years.

 

It sounds like by sending this letter there will be no mention of CIL and all the hoops you have to go through for self builder exemption and none of the sully worry that if you do some "work" before the exemption is in place of having to pay the CIL.

I suggest it would be safe to assume that the CIL process should be followed meticulously just like any other self build.  Rather expensive if it turns out later it was needed, and it’s just a few simple forms.

[nod]

36 minutes ago, G and J said:

I suggest it would be safe to assume that the CIL process should be followed meticulously just like any other self build.  Rather expensive if it turns out later it was needed, and it’s just a few simple forms.

No The Cil is so straightforward Fill the form in Wait for an email and that’s it The only way you can breech it is by selling your house before the three years There not there to catch you out Just to make sure developers pay what is due 

[garrymartin]

Be careful here; you must still complete the CIL forms.

 

Sometimes, your approval might be *because* it is a self-build. It's common, for example, when the LPA has not provisioned sufficient self-build plots to meet the demand on Part 1 of their Register and so the "tilted balance" can be argued and applied.

 

With CIL, even if you've filled in the forms, you can still sell the property right away and just pay the CIL charges. What your LPA is probably looking for is a Section 106 agreement to secure it as a self-build if that is the reason for the "balance" tipping your way in relation to approval.

 

My local LPA seems to have a standard Section 106 document drafted by their legal department to cover this, and also for Affordable Housing Contributions. Some mention a requirement for the person to also be on the self-build register, but some don't. Either way, it's very easy to apply to be on the register. I've attached an example.

Apr_06_Ridgers(1).pdf

[Alan Ambrose]

>>> The Cil is very clear

 

Yeah, I think it's a badly written and fragile bit of legislation that can catch the unwary for multiple £10s of thousands if they just get the timing or a single entry on a form wrong. We, as a society, have far too many unethical 'rules' like this - forget to pay your £1 parking charge or enter your reg wrongly - well that'll be a £100 fine, thanks. Earn £10 of the limit as a carer - we'll demand 10 years / £40k of carer's allowance back.

 

I wonder what the S106 advantage is to the LPA over and above the CIL legislation?

[Dave Jones]

On 15/09/2024 at 11:26, nod said:

No The Cil is so straightforward Fill the form in Wait for an email and that’s it The only way you can breech it is by selling your house before the three years There not there to catch you out Just to make sure developers pay what is due 

 

agree, simple and straightforward process.

[TommoUK]

..maybe its more to do with the BNG obligation if you sell within 3 years

[TommoUK]

https://khub.net/web/planningadvisoryservicepas/forum/-/message_boards/message/1025728924#_com_liferay_message_boards_web_portlet_MBPortlet_message_1025728924

[Alan Ambrose]

Goodness gracious - some daft planner thinks someone will go to the trouble of applying for PP, building a house and possibly paying 10s of thousands of penalty CIL for selling within 3 years - just to avoid BNG.

 

These guys are operating on another ..!.X..! planet.

[TommoUK]

18 hours ago, Alan Ambrose said:

Goodness gracious - some daft planner thinks someone will go to the trouble of applying for PP, building a house and possibly paying 10s of thousands of penalty CIL for selling within 3 years - just to avoid BNG.

 

These guys are operating on another ..!.X..! planet.

..planet BNG is best avoided if you can

[Paul K]

Thanks for all your contributions. I think I now better understand where the LPO is coming from, but it seems unusual that they don't have a standard agreement in place already if this is their policy. It's probably quicker and more favourable for me to draft something, so I'll just have to come up with some wording that will satisfy them.

 

In relation to the BNG, the Derbyshire Wildlife Trust has just submitted a late comment saying that we need to prove at least some biodiversity gain, despite being exempt, and it seems that the LPO is likely to add this as a condition! I feel another battle coming our way...

[Dave Jones]

10 minutes ago, Paul K said:

Thanks for all your contributions. I think I now better understand where the LPO is coming from, but it seems unusual that they don't have a standard agreement in place already if this is their policy. It's probably quicker and more favourable for me to draft something, so I'll just have to come up with some wording that will satisfy them.

 

In relation to the BNG, the Derbyshire Wildlife Trust has just submitted a late comment saying that we need to prove at least some biodiversity gain, despite being exempt, and it seems that the LPO is likely to add this as a condition! I feel another battle coming our way...

 

id let them add all the conditons they like, secure planning. then appeal the conditions with costs. its free so nothing to lose.

 

Unfortunately dead head civil servants are completely unaccountable in the country so can literally do what they want with zero repurcussions.

[garrymartin]

14 minutes ago, Paul K said:

saying that we need to prove at least some biodiversity gain, despite being exempt

As a self-builder, you're exempt from the legislation that requires at least 10% BNG. In my area there is still a policy requirement to leave conditions no worse. This, by definition, implies "at least some biodiversity gain" so I don't think it is an unusual condition. Just be careful about how they will want it measured and proved in order to discharge the condition.

[Dave Jones]

While it may be good in principle, in reality how do you do it ? Infil plots are rarely large enough to plant extra trees and who wants trees anyway with the potential for damage and maintenance. 

 

It's just a tax plain and simple.

[TommoUK]

53 minutes ago, Dave Jones said:

While it may be good in principle, in reality how do you do it ? Infil plots are rarely large enough to plant extra trees and who wants trees anyway with the potential for damage and maintenance. 

 

It's just a tax plain and simple.

Agreed. Its a tax, but unlike CIL theres no way of working out the cost unless you pay an ecologist to prepare a BNG matrix.  So once they've done this you are told how many 'units' you need to achieve 10% net gain. Units can be bought on the open market from 'registered' landowners.  Landowners undertake to improve their land and maintain it for 30 years via s.106 with the LPA. Once you buy the units from the landowner you discharge the condition and your purchase is logged on the register. You all still with me? Units cost around £30,000 on the open market. If you can't or don't buy from the open market the default is to buy 'credits' from UK government. Credits are priced significantly higher than 'Units' to force you to go to buy from the 'open market'. Hard to see how this doesn't slow down planning and increase agricultural land prices. 

[Alan Ambrose]

Isn't it odd that all the 'rules' seem to be written in favour of the landowners

[Temp]

I was going to suggest you offer them a letter something like..

 

I certify that the development approved by planning reference XXXXXXX will be be a "self build" that qualifies for the Self Build exemption specified in:

The Community Infrastructure Levy Regulations 2010 as amended by

The Community Infrastructure Levy (Amendment) Regulations 2014, Amendment to Part 6, exemptions and reliefs. 7. (10) Exemption for self-build housing.

Signed  dated

Witness  dated, occupation address.

 

However I'm having second thoughts...

 

Suppose something happened to you that prevented you living in the house. Perhaps an injury or change in financial circumstances. Paying the CIL is one thing but invalidating your planning application is another matter. Instead of "will be" I think I would try "is intended to be" or perhaps "subject to events outside your control is intended to be"?

 

The more I think about it the more I think you need a solicitor to draw it up. 

 

I also suspect they will want this to be a S106 agreement. This normally means paying £lots for their solicitor to approve it as well. In addition some councils charge a "monitoring fee" for S106 agreements. One council charges £1500 for a monitoring fee for a single house. 

 

So overall I think I would try resisting it. Point out that there is a significant financial penalty if you don't qualify for the CIL exemption and that should be incentive enough to ensure compliance and that their requirement for a S106 agreement and associated costs to ensure its a self build would actually deter self builders. 

 

 

 

 

[Temp]

On 15/09/2024 at 09:45, nod said:

There’s no such agreement needed 

The Cil is very clear 

If you sell the house within three years of sign off You pay the Cil If you are still living there after three years The cil is discharged Tell him you are fine and will do what everyone else does 

 

Unfortunately the government didn't totally exempt self builders from S106 agreements. Unless I'm out of date?

 

Some planners require a developer of a large site to sign an S106 agreement stating that x% will be self build, y% will be affordable etc. So there is some sort of a precedent. 

 

[nod]

7 hours ago, Temp said:

 

Unfortunately the government didn't totally exempt self builders from S106 agreements. Unless I'm out of date?

 

Some planners require a developer of a large site to sign an S106 agreement stating that x% will be self build, y% will be affordable etc. So there is some sort of a precedent. 

 

I was referring to a single build 

We have two plots Which we planned to do the foundations for both at the same time I was presented with a bill for 65 k As I now had become a developer I agreed to start only one and received the Cil exemption

To be fair it is pretty clear 

[Alan Ambrose]

Oh FFS - I'm just re-submitting my planning application and I find that my LPA has added this kind of nonsense since I did the last one. Yeah, war on all builders, yes! Keep those land prices high!

 

This is my answer to Q6 btw:

 

1.      Would you be willing to accept a condition and/or section 106 agreement clause confirming the development is for/includes custom and self-build housing? If no, please explain why.

 

No, this is unnecessary and the CIL self-build exemption already requires the filing of self-build evidence e.g. self-build mortgage, self-build VAT reclaim etc. Also, some mortgage providers have said that they will not accept this style of arrangement.

[Alan Ambrose]

I think I understand now - this is a bit like LPAs removing PD rights as a matter of course (i.e. ignoring the rules sent down by central government).

 

As central government has said "self builds are free from CIL" then the LPAs have gone "bollox to that - let's find another way to tax the self builds ... I know, how about a section 106 agreement ...".

Edited October 24 by Alan Ambrose

[SBMS]

We had the same issue about 8 weeks ago. At the last minute the council panicked because the planners had all been on a BNG course and were not clear as to how to approach this with self builds. Our planning consultant played a blinder here. The council basically said the ‘easiest’ thing would be to prove a 10% gain on our site as we actually clearly have it. Planning consultant stood his ground and said no, that would incur additional cost for us in assessing and undue delays. He drafted this condition which satisfied the council and I believe is now standard for most self builds in the borough to protect against submitting as a self build without any intention to build as a self build and then avoiding BNG. Can you suggest the following as a condition? It’s nice and simple and I think works for both parties

 

“The dwelling hereby approved shall be constructed as a self-build dwelling within the definition of self-build and custom build housing in the 2015 Self-Build and Custom Housebuilding Act (as amended by the 2016 Housing and planning Act):
i) The first occupation of the dwelling hereby approved shall be by a person or persons who had a primary input into the design and layout of the dwelling and who intends to live in the unit for at least 3 years;
ii) The Council shall be notified of the persons who intend to take up first occupation of the dwelling hereby approved at least 2 months prior to first occupation.”

 

note that as our planning consultant pointed out its drafted in such a way that we only have to have the intention to live it in for 3 years… not actually live in it for 3 years…