Self-build and Custom Housebuilding

On 1 April 2016 the remaining provisions of the Self-build and Custom Housebuilding Act 2015 will come into force. Of most importance to local authorities and developers is the requirement for relevant councils (excluding county councils in areas where there are district councils) to keep a register of individuals and associations of individuals who are seeking to acquire serviced plots of land in order to build houses for those individuals to occupy as homes.

Self-build and custom building is an important element of the Government's planning strategy for housing. Paragraph 50 of the NPPF states:

To deliver a wide choice of high quality homes, widen opportunities for home ownership and create sustainable, inclusive and mixed communities, local planning authorities should:

  • Plan for a mix of housing based on current and future demographic trends, market trends and the needs of different groups in the community (such as, but not limited to, families with children, older people, people with disabilities, service families and people wishing to build their own homes); 

The purpose of self-build and custom housebuilding registers is to provide valuable information on demand for self-build and custom housebuilding which should form part of relevant authorities' evidence base of demand for this type of housing which feeds into their Strategic Housing Market Assessment.

Self-build is where an individual or association of individuals directly organises the design and construction of their new home themselves. This can range from a traditional DIY self-build or building as kit home. Custom building is usually when an individual or association of individuals commissions a specialist developer to build their home.

For the purposes of this note, there is no practical difference in the definitions. For the purposes of CIL, Regulation 54A of the Community Infrastructure Regulations 2010 (as amended) defines self-build housing as a dwelling built or commissioned by a person and occupied as their sole or main residence.

Section 2 of the Act requires authorities (including all county councils)to have regard to the registers relating to their areas when they discharge functions relating to planning, housing, land disposal and regeneration. In practical terms for planning this means the evidence from the register must be considered when plan making and is a material consideration in decision making. 

The Department for Communities and Local Government ("DCLG") has published Self-build and custom housebuilding: draft planning practice guidance (Self-build PPG), to accompany the (Self-build and Custom Housebuilding (Register) Regulations 2016 (SI 2016/105) (Register Regulations).

The Register Regulations

The Regulations set out the eligibility criteria for entry onto the register and the details of the information that is required. Regulation 3 sets out the requirements for 'serviced plots' as having access to a public highway and connections for electricity, water and waste water. 

The Guidance

The Self-build PPG comes into force on 1 April 2016. The draft PPG adds some useful guidance on matters such as how relevant authorities should deal with applications by couples or two or more members of the same household and whether relevant authorities can restrict entry onto the register to local people. The answer to that is no.

The draft PPG recommends that relevant authorities hold a webpage that is dedicated to self and custom building. Relevant authorities are not required to publish their register but are required to publicise it. However they are encouraged to publish, in the Annual Monitoring Report, headline data on the demand for self and custom build.

Future provision

Chapter 2 of Part 1 of the Housing and Planning Bill 2015-16 adds to and amends the Self-build and Custom Housebuilding Act 2015 by requiring local planning authorities to grant "sufficient suitable development permission" of serviced plots of land to meet the demand based on the register. 

Comments, observations and tips

1.  Self-build and custom building is a central theme of the Government's planning policy relating to the provision of housing so it looks like it is here to stay.
2.  The 2015 Act provides a useful starting point for the definition of serviced plots. Local planning authorities may seek to expand upon that definition to ensure that these plots, when developed as part of a wider mixed scheme, have services commensurate with the market housing on the site, such as fibre optic broadband.
3.  Some local planning authorities are already requiring the provision of serviced self-build / custom build plots on larger developments. For example Teignbridge District Council, which was one of the 11 vanguard authorities for self-build / custom build, requires that for developments of over 20 dwellings, 5% of those plots are provided as self-build / custom build (Policy WE7 of the Teignbridge Local Plan). Further details of Teignbridge's requirements are set out in a SPD.
4.  For the larger developers which are required to provide self-build / custom building plots, these plots could be double-counted, so that they are included in the proportion of affordable housing required for the development. In such cases they will usually be considered as intermediate housing.
5.  In terms of other requirements of the local planning authority, there may be a relevant design code that self / custom builders are required to meet and on the larger schemes the local planning authority may require a mix of plot sizes.
6.  When negotiating the Section 106 Agreement, care should be taken to ensure that adequate provision is made to address the circumstances where the developer is unable to sell the plots. Usually the provisions will deal with the type, extent and duration of marketing and for ensuring that the plots are offered at a reasonable price. If a sale is not forthcoming after the agreed period and following the approved marketing at the agreed price / mechanism, the Agreement could either require the plots to be transferred to a Registered Provider of affordable housing or the developer can build open market housing.
7.  Some local planning authorities may allow an off-site contribution towards self-build / custom building in lieu of on-site provision.
8.  Developers should check that there is demand for self / custom build plots in a particular area prior to submitting a proposal. They will not want to agree to the provision of plots where there is no recorded demand.
9.  Self-build / custom building plots are exempt from the requirement to pay CIL. This is not subject to a financial threshold other than the local planning authority has to be mindful of state aid implications. It is important to ensure that on larger developments, careful consideration is given to phasing and submission of reserved matters applications. The self-build / custom building plots will be included in the outline application but should have separate reserved matters applications. The concern is that the CIL exemption could be lost if development is commenced as part of reserved matters scheme in which these plots are included.
10.  It is also important for CIL exemption that it is a genuine custom build. It is not sufficient for a person to buy a home off-plan from a developer. There has to be a genuine commissioning of a home. Implicit in the word 'commission' is the instigation of an order to produce something special and the retention of control and oversight over the production process itself. A genuine 'commission' where these features are present can therefore be distinguished from a standard off-plan purchase where the development is instigated by the developer for onward sale to the purchaser and the purchaser's control and oversight are limited.
11.  The construction of new build dwellings is not subject to VAT, so self / custom builders are able to reclaim their VAT.

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