Self Build series Part 1

We regularly get CIL self-build enquiries following our blog. Sadly, more often than not the request for advice comes after works have commenced (often without a commencement notice having been given) or a subsequent application has been made at the behest of local authorities (LPAs). 

Here are some common risks with the self-build exemption:

1. A self-build exemption does not, at present, transfer to a related application (i.e. a s73 application or a new application for substantially the same development). This means that:

a. a new application for the self-build exemption needs to also be made for the subsequent application. If works have not commenced under the original application then this is a straight-forward repeat of the same process for the original application (if not see 2 below);

b. the self-build exemption must be obtained and a commencement notice submitted in connection with the new permission before starting any work on the site.

If the above steps are not complied with strictly, the right to claim the self-build exemption in connection with the revised/new permission is likely to be lost forever and full CIL will be payable in connection with it.

2. Where works have started but deviated from what was originally approved, a LPA will often request that the self-builder submit a new application (s73 or new application) to regularise the works. It is critical that a self-builder does not follow the LPA’s request blindly and submit a new application (s73 or new application) without seeking legal advice first because:

a. a new application (s73 or new application) means a new permission and chargeable development, which carries new CIL consequences;

b. a new application (s73 or new application) is different to an amendment under s96a which simply amends the existing permission by, for example, the substitution of new plans. An application under s96a is the only safe route for regularising the works on site without jeopardising the existing self-build exemption.

If the change is not material and is only required to regularise the position, then the LPA should not resist a s96a application, especially after the self-build position is explained to them.  Even if the LPA will not accept the justification for a s96a application a self-builder should refuse to comply with their request until seeking legal advice to confirm it will not open them up to an unexpected CIL liability that could be in the tens of thousands.

Part 2 of this Series will consider some of the options that could be considered if the second scenario above arises and the LPA will not accept a s96a application.

Self-build series Part 4: Further reform still needed

This Series has explored the common CIL risks for self-builders and the proposed amendments that should help to protect future self-builders from themselves. These changes are summarised in Part 3 of this series. 

Whilst the changes have addressed most of the potential future pitfalls with the self build exemption, they do not address or undo any previous injustice that has resulted in many self-builders incurring unexpected CIL in the tens of thousands. 

We do not accept the Government’s explanation that retrospective amendments to the Planning Act 2008 are not possible, we will continue to lobby for retrospective amendments to rectify the unfairness that has experienced by so many self-builders to date, as well as further amendments to:

  1. introduce an appeals process against the refusal of SBE application and other reliefs;
  2. the wording in regulation 54(C)(3) and/or the Self Build Part 2 Form (form 7) to make clear that the information or evidence that is to be submitted to verify the use of the home by the self builder is not limited to the three things listed on the form. Other types of evidence could satisfy the requirement and the requirement to ‘include the particulars specified or referred to in the form’ does not provide the Collecting Authority with a discretion to accept evidence beyond the three things listed on the form[1].

Watch this [blog]space.


[1] We are aware of a situation where a home was purpose built for a disabled child and due to the build being funded by the child’s trustees it was not possible for one of three supporting documents required under the Self Build Part 2 Form (form 7) to be supplied and this resulted in the SBE being withdrawn

Self-build series Part 3: Self-build pitfalls fixed, but will not remedy existing injustices

The earlier blogs in this Series have explored the pitfalls in the CIL regulations in connection with the self-build exemption (SBE). 

After much lobbying the Government appears finally to have listened.  The Government’s response on the Developer Contributions consultation confirms that the proposed amendments to the CIL regulations (that were announced as part of the Government’s Developer Contributions reform consultation) will be taken forward to make the SBE process a little easier, fairer and more forgiving. 

The draft regulations (laid before the House of Commons to come into force on 1 September 2019) ensure the penalties that result from a self-builder failing to submit a commencement notice before starting development will be softened. Instead of losing the SBE entirely, the developer will only be required to pay a mandatory surcharge equal to the lesser of £2,500 or 20% of the CIL that would apply to the development if not for the exemption (i.e. the penalty is capped at £2,500)[1], and confirm that the SBE to be carried over to an amended permission (i.e. a s73 permission), even if the development has commenced under the original permission[2].

This will not apply to wholly new applications, so careful thought still needs to be given to the potential CIL consequences if a new application is made after works have commenced under the original permission.

In addition to the changes for self-builders, the proposed amendments will also help to correct many of the pitfalls that plague the other CIL exemptions including:

  • the failure to give the commencement notice before starting development will no longer (from 1 September 2019 assuming the amendment regulations take effect) result in the loss of charitable relief or social housing relief exemption; and
  • the failure to give the commencement notice before starting development will no longer result in the loss of the exemption for residential annexes and residential extensions (from 1 September 2019 assuming the amendment regulations take effect).

However, as for the self-build exemption, the failure to give the commencement notice in advance of starting development will for each of the abovementioned scenarios give rise to a mandatory surcharge of no more than £2,500 (although the draft amendment regulations do not explicitly refer to residential extensions being subject to this penalty).

Unfortunately, the proposed amendments are not to have retrospective effect, so will not address or undo any previous injustices.  Part 4 of this Series will address this and what more is needed.


[1] Regulation 6 of the Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019

[2] Regulation 7 of Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019 proposes a new regulation 58ZA


Self-build series Part 2: Options for retrofitting the exemption to future permissions

Following on from Part 1 of the Self-Build series, the precarious position for future self-builders should be improved later this year, given the Government’s response to their Developer Contributions consultation.  However, the proposed amendments will only come into effect from 1 September 2019, arriving too late to fix the predicament of many existing self-builders.

Therefore, if works have started but deviated from what was originally approved and a s73 application or new application is made (instead of a s96a application) but not determined, to try to avoid a CIL liability under the new permission the self-build should consider and discuss one or more of the following options with the LPA:

Option 1 – Agree to extend the determination date for the s73 application until after 1 September 2019 when the proposed amendments have taken effect to allow a transfer of the self-build exemption. 

Option 2 – Agree that commencement under the original permission does not disqualify the new permission from the self-build exemption.

It is not uncommon for LPAs to claim that commencement under the original permission constitutes commencement for the purposes of the new permission and that this disqualifies the new permission from the self-build exemption.  Whether or not the LPAs position is legally correct depends on how far advanced the works are under the original permission, as there will need to be a material operation that could be undertaken as part of the new permission to implement it. If the LPA can be convinced that that works have not commenced for the purposes of the new permission and that they are still capable of granting the self-build exemption for it, the self-builder ought to (as soon as possible and before the new application is determined):

  1. submit an application for the self-build exemption;
  2. cease development under the original permission in advance of the new permission being granted, and not recommence development under the new permission until:
    • the self build exemption has been granted; and
    • a completed assumption of liability notice and commencement notice is submitted to the LPA for the new permission (noting a future commencement date);
  3. document their development activities as clearly as possible (i.e. document/photograph when and where the works stopped on site, what works were the material operation under the new permission, obtain written statements from contractors, etc.) so this evidence can be provided to a LPA, if needed to corroborate their position. 

Option 3 – If the LPA will not agree that commencement under the original permission does not disqualify the new permission from the self-build exemption

  1. write to the LPA to ask that the s73 application be determined as a s73A application, with the self-build exemption to be granted on the same day as the permission. If this is not agreed by the LPA or the application is not a s73 application, the application should be withdrawn and a new application submitted as a s73A application;
  2. submit an application for the self-build exemption in advance of the application being granted permission; and
  3. submit with the self-build exemption application a completed assumption of liability notice and commencement notice which states that the date of commencement is the date of the grant of the new permission and the self-build exemption.

All of the options carry large risk and require the cooperation/‘blessing’ of the LPA. Option 1 is the preferred approach as it carries the least risk and should be the easiest to secure LPA agreement to.

If a self-builder has made a new application and is unable to agree one of the above approaches with a LPA, quickly, it should consider withdrawing its application before it is granted and the potential CIL liability is crystallised. 

Given the Government’s response to the Developer Contributions consultation, it is unlikely that a LPA would seek to take enforcement action where a self-builder withdrew or delayed the making of their s73 application, on the understanding that the self-builder would submit a s73 application as soon as the proposed amendments to the CIL regulations take effect. 

The proposed changes to the CIL regulations do not relate to s73A applications. Therefore, it is critical that the LPA is comfortable that a s73 and not a s73A application can be used to correct works deviating on site from what was originally approved. This will be more of an issue for those s73 applications that are made late in the development process and there is very little work remaining. 

Part 3 and 4 of this Series will address the Government’s response to reforming developer contributions and the changes that will be made to the CIL regulations to help make the self-build exemption process a little easier, fairer and more forgiving in the future. 

Until at least 1 September 2019, self-builders need to remain alert to the risks outlined in Parts 1 and 2 of this Self-Build series.

Community Infrastructure Levy (CIL): is the self-build exemption achievable?

The CIL regime ushered in by the Community Infrastructure Levy Regulations 2010 has brought more development within the scope of developer contributions. ‘Self-builders’ – who directly organise the design and construction of their new home – now generate around 10% of new private sector housebuilding (Self Build Housing Market Report – UK 2016-2020 Analysis). Their experience of CIL was meant to be straightforward, but regulatory complexity and attitudes to charging have meant that it is anything but.  We discuss the CIL regulations’ exemption and highlights its deficiencies.

Read the full article

This article was first published in Property Law Journal (September 2017) and is also available at www.lawjournals.co.uk

You only get what you ask for – High Court confirms approach to unauthorised building immunity

In R (Waters) v Breckland District Council [2016] EWHC 951 (Admin) the High Court considered whether a planning authority determining an application for a Certificate of Lawfulness in relation to buildings constructed without permission had to consider the lawfulness of their use.  The agricultural operator applied only in respect of the lawfulness of the operational development not the use, and the Council concluded that the four year period for accrued immunity applied under Section 171B(1) TCPA 1990.

high courtThe claimant agreed that the Council should have taken into account that:

  • the erection of a building resulting in a material change of use of land is subject to a ten year – not a four year-time limit; and
  • that buildings which are an integral part of an unauthorised use may be liable to removal even if the buildings themselves become immune.

The High Court dismissed the claim on the basis that the law in relation to certificates distinguishes between operational development and use – applicants may specify both in any application. When dealing with an application for a certificate in respect of operational development only, planning authorities are therefore not under any duty to consider the use associated with them.  She distinguished cases dealing with enforcement against unauthorised changes of use where it is recognised that an enforcement notice may require buildings to be removed where they are an integral part of the unauthorised use (Murfitt v Secretary of State for the Environmental (1980) 40P&CR254).  It was relevant that the application for the certificate was for operational development only (and that the building/structures were not solely for the purpose of the alleged industrial intensified use relating to the wider lawful use of the site).  The claimants’ application to require the authority to issue enforcement proceedings also failed.

The key points are that:

  • Applications to regularise the status of new buildings should cover both operational development and the relevant use.
  • Where use is an issue, the ten year immunity period will generally apply.
  • Achieving a certificate for buildings does not rule out subsequent enforcement against the use itself (but is subject to the application of the principle of fairness and good governance that may preclude subsequent enforcement action, noted in Welwyn Hatfield BC v Secretary of State for Communities & Local Government [2011] UKSC15).

Nearly Three: teething at an end?

Community Infrastructure Levy changes confirmed.  Regulations are about to be laid (coming into force by the end of January 2014) to:

  • extend the effective deadline for CIL adoption/ s106 pooling restrictions by 1 year
  • exempt ‘self builders’ from CIL
  • allow rates to be set by scale/ size of development
  • relax the requirement for buildings to be in active use before redevelopment to avoid liability (to 6 continuous months in 3 years)
  • allow detailed permissions the same phasing/cashflow flexibility as outline permissions
  • broaden the availability of discretionary relief where s106 obligations create viability constraints
  • allow CIL payments to be credited against CIL liabilities where schemes change as they are constructed
  • clarifying that Affordable Rent benefits from Social Housing Relief
  • base CIL liability on the date of permission, rather than the ‘first permits’ date
  • allow developers credit for delivering (or promising to deliver) strategic infrastructure, subject to procurement rules

Watch this space on CIL Agreements and procurement solutions.

Turn up the volume

Despite political demotion, housing delivery is a key issue for planners, politicians and investors.  Residential yields are driving interest in mixed use schemes that have been dormant for years and in new products such as PRS (http://www.dentons.com/en/insights/articles/2012/november/12/if-you-build-it-will-they-come).

Going for gold

Three years ago (13 September 2010) the House of Commons Communities and Local Government Committee heard from Eric Pickles, Grant Shapps and Greg Clark on the abolition of the “crazy” Regional Strategies an action described by Shapps as “the greatest favour of getting homes built of any government since the last war“.  Building more homes each year than during the previous Government’s tenure would be the “gold standard upon which we shall be judged” he said.  There is a forecast 20% increase in new households to 2031 and planning will fail to meet identified needs if it delivers less than 240,000 per year, every year, for the next 20 years. This remains the Government’s current target, by 2016. So where are we now?

Mind the gap

A long way from the Gold Standard – 106,000 completions last year (9% down on the previous year).  The 2007 Calcutt Review concluded that the housebuilding industry would have to grow by nearly 5%, compounded, over the next decade to achieve the Government target. The pictures tell the story (see below).

shelter

(Prepared by Shelter)

England has a track record of housing reform to head off the social unrest that shadows overcrowding and dissatisfaction with place.  Since the announcement of the Government’s Gold Standard for delivering at least 240,000 new homes per year, housing has begun to assume even greater political significance.  Scarcity values, the diversion of national wealth to servicing mortgage debt and the restraint on home formation are ultimately a brake on the economy.

We have to double up delivery from today (and achieve an increase of 50% above recent peak delivery). That is a new Southwark delivered (not just consented) every year, or a new Birmingham (numbers-wise) every three. Assuming the private sector can deliver 130,000 homes every year, that still leaves an Exeter, 7 Hampstead Garden Suburbs or 2 Welwyn Garden Cities every year for two decades. Will Nick Boles’ vision of self builders delivering the gap be realised? You can, apparently, shoot him if he is still responsible in 2015.

The next blog on this topic will look at what reforms are needed to genuinely deliver against this volume of unmet need.

Assets of Community Value – no horseplay, for now

Back in 2016, we commented on the first  Asset of Community Value (ACV) case to reach the Upper Tribunal.  The case concerned green belt land included in the 2009 Strategic Housing Land Availability Assessment as suitable for 110 homes.  It had been used informally by the local community for 40 years, and was listed as an ACV in 2014.  As a result, the land became subject to the ‘Community Right to Bid’ restrictions and the ACV status became relevant to planning decisions.  Banner Homes requested a review of the listing decision and then appealed to the First Tier Tribunal and later the Upper Tribunal, all unsuccessfully. 

Since then, planning permission has been refused twice (for a change of use to the keeping of a horse and for construction of a stable block), with those refusals upheld on appeal on both occasions.  Most recently, in January this year, St Albans City and District Council’s planning committee again refused an application for change of use to horse paddock, contrary to advice from officers.  However, the reason for refusal was that the site is located in the metropolitan green belt, and although “the impact on openness would be small, it is not demonstrated that very special circumstances exist”.  The Committee Report considered the land’s ACV status, but concluded that the development proposal was not inconsistent with that status, as local people could still use the footpaths, and would have the opportunity to make a bid to purchase the land in the event of a sale. This is rather different from the local intent behind the ACV listing – and the rationale for the Court of Appeal’s decision to uphold it – on the basis that the community use of the field beyond the footpaths could restart despite being fenced off (because the green belt status of the land made any alternative permission/ use unlikely).

The land is clearly very important to local people, but while its ACV status has prevented the land coming forward for development, it is worth noting that it has not been determinative in the planning decisions (nor more influential than the underlying green belt status).  The current position therefore perhaps demonstrates the impact of a well organised community group, and supportive planning committee members, alongside the ACV regime itself, in dealing with planning applications on ACV land.   

The land is being promoted for 160 homes (including 50% affordable homes) as part of the Local Plan process.  The expiry of the 2014 ACV listing later this year is likely to tigger a re-consideration of the question of whether there is a realistic prospect that the wider field could be used by the community in the near future.

Capital Gains

Dentons, together with URBED and Gerald Eve, were instructed by the Greater London Authority to look at international land assembly practices, to feed into recommendations on those conditions that would best support land assembly for house-building in London.  On 14 May the Deputy Mayor, James Murray, published ‘Capital Gains: A Better Land Assembly Model for London’ which brings together the research evidence and sets out 10 recommendations to support a shift in land assembly practice.

In London, the assembly of land is often seen as one of the main challenges to increasing build-out rates. The report identifies several barriers to land assembly in London, ranging from factors inherent in the sites, such as contamination, to factors associated with ownership, such as the extent of fragmentation and compensation expectations. The research evidence focussed on three European case studies – ZAC Claude Bernard in Paris, Freiburg in Germany and Amersfoort in The Netherlands – and a North American case study focussing on Toronto, Canada and Oregon, USA. The research identified policies, strategies and procedures that have been applied positively to facilitate land assembly and accelerate the pace of delivery. Those measures that we consider are the ‘best fit’ for London form the basis of the 10 recommendations.

A core recommendation is the introduction of a new planning designation termed ‘Land Assembly Zones’ (recommendation 1). These are strategic sites or areas where land assembly will be supported, through interventionist measures if required. The aim is to provide a focus and to encourage land owners to self-assemble, with a designation as a LAZ being accompanied by an ‘in principle’ resolution to exercise compulsory acquisition powers (recommendation 2). This would be a clear signal to landowners, and also an invitation to developers to bring forward proposals in the area.  The measures recognise that limited resources are available for public intervention and we expect the zones will be focused on those areas where housing density can be significantly increased if land is assembled into larger development parcels, where fragmented ownership is a real development constraint and, initially at least, in areas with good transport connections.  We recommend that land values are frozen for CPO compensation purposes on the date of designation, to crystallise the ‘hope element’ of the CPO compensation (recommendation 8).

The second core recommendation is the introduction of statutory land pooling. We recommend that the GLA prepare template documents to support the voluntary bringing together of land, drawing on the Dutch Building Rights model of sharing value uplift. In the longer term we recommend that this voluntary approach be underpinned by a new statutory mechanism (recommendation 7). We see that mechanism covering two scenarios: a private sector model, driven by landowners and a public-sector model led by the GLA or local authority.  In both scenarios the compensation paid to landowners would include part of the marriage value of the assembled site. Although not a formal recommendation in the body of the report we explore the possibility of “density bonuses” where land is masterplanned and assembled, potentially also delivering additional value and an incentive to self assemble.  We see this type of land pooling having application on all scales of site. We suggest the creation of a multi-disciplinary team to support boroughs and developers in tackling strategic and difficult sites, with the devolution of additional finance to support this (recommendation 10).

The report makes further recommendations regarding the acquisition of land, including allowing the confirmation of CPOs in the interests of ‘good planning’ ahead of planning consent being granted. Developers of large strategic sites need certainty at the start of a project that the entirety of the land will be available, even though it may not be built out for several years. Against that backdrop it is unrealistic to expect there to be a fully worked up scheme. We suggest that weight be given to the LAZ designation (which itself will be the subject of scrutiny) when considering whether the confirmation of the CPO is in the public interest (recommendation 4). In order to facilitate this we believe the power to confirm borough CPOs should be delegated to the GLA (recommendation 5).  This would assist in embedding ‘innovative’ approaches to the exercise of CPO powers. For example the introduction of a ‘use it or lose it’ approach to CPO land. If development on land which has been acquired compulsorily does not proceed the GLA or local authority should step in to hold that land, and any other land owned by the proposed developer, to ensure it is brought forward for development.