New Build plus 50k to council?

New Build plus 50k to council?

15:09 PM, 6th October 2015, About 6 years ago 28

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I have a small of piece of land in my garden that can fit a small 2 bed house. I went for planning advice and I was told that if i was granted planing permission, I would have to pay a CIL fee, and also contribute towards the council’s education/ highways/ affordable housing etc which could cost as much as £50k in total. CIL

The profit probably would not be up to 50k… Is there a way to go around this as I might as well just work for the council.

Many thanks

Pete

 



Comments

by Evan Owen

18:05 PM, 7th October 2015, About 6 years ago

by Stephen Reynolds

18:32 PM, 7th October 2015, About 6 years ago

You would be surprised about a basement. Speak to one of the specialist basement companies they are doing then all over London now. Outside of the south east the cost can be about the uplift in value but anywhere in London the cost to value ratio can be as good as 100%. They can't really refuse as there are no real grounds. Seriously consider moving in to house yourself. As a self builder it will be VAT free. CIL free and most importantly no CGT if you keep it as your main home.

by matchmade

11:36 AM, 8th October 2015, About 6 years ago

Reply to the comment left by "Evan Owen" at "07/10/2015 - 18:05":

Evan - you are right, my apologies. Of course I read about the Reading/West Berks challenge earlier this year, but my inadequate brain hasn't fully digested it.

Brandon Lewis apparently said at the recent Tory Party Conference "For local authorities to be asking for £145,000 per house in section 106 agreements on sites of six or seven houses is completely ridiculous," he said. "And then they complain that nobody is building homes in their areas."

Vanessa Warwick, who runs Property Tribes, has requested suggested questions to ask Mr Lewis at the upcoming London Prop Tech 2015 exhibition. I've asked why he only talks about S106: if the Government can exempt self-builders from CIL on the grounds that the charges are frequently unaffordable, why not small builders and developers too?

Pete - you need to clarify with the council exactly what they charge before you make any decisions. It sounds like they may operate a hybrid scheme: S106 to "contribute" towards social housing, and CIL for infrastructure. You will be unlucky if they try and charge S106 on a single house, and you will be exempt from CIL if you self-build or sell to a self-builder.

Basements - worthwhile on a small site if you want more floor area than the achievable plot size and ridge heights permit, and if you have space around the curtilage to dig window wells and get natural light into the rooms. The construction cost can vary significantly depending on ground conditions. Most houses outside London don't bother with basements because of the perceived much higher cost per extra square metre, and concerns about water leakage. Modern drainage systems are greatly improved but it is still very difficult to get reliable figures on what the extra cost could be.

You could include a basement in your planning application, so you or your self-build buyer at least has the option of the extra space. This doesn't mean you have actually to build the basement, if you find the cost unaffordable: you just build your foundations in the normal way.

by Pete Moore

9:24 AM, 9th October 2015, About 6 years ago

Thanks for your valuable comments regarding Cils, S106 and basements. I will put all these to the council when next I go for pre-planning advise.

Thanks a million, much appreciated. 🙂

by matchmade

10:34 AM, 9th October 2015, About 6 years ago

Reply to the comment left by "Pete Moore" at "09/10/2015 - 09:24":

I forgot to comment on your earlier query whether you can rent the house out after securing planning. Yes, but you will have to pay CIL, which will wipe out any rental profits for years.

You could try and pretend you are a self-builder, say you're living in it, then rent it out for three years, but I expect there will be heavy penalties if you are caught. A landlord who is single might get away with an arrangement where he has all the bills in his name, keeps one bedroom for occasional overnight stays whilst living most of the time elsewhere, and rents the rest of the house out to "lodgers", but this would be very hard to justify for anyone with a family.

£53,000 in CIL and S106 for a small 112m2 house is an incredibly high level of tax. Are you absolutely sure this is right? I've looked at Enfield Council's Draft CIL charging schedule at http://www.enfield.gov.uk/downloads/file/10457/draft_charging_schedule_december_2014, and the maximum charge for residential housing is £120 per square metre, with lower rates in certain parts of the borough. This works out at £13,440 for your house, so even with the London Mayor's top-up CIL and a social housing S106 tax on top, I struggle to see how you reach £53,000.

If it is £53K, the obvious solution, besides selling the site to a self-builder, is just to make the house smaller! A small drop from 112m2 to 99.9m2 would mean there would be no CIL to pay, and perhaps no S106 either. You may then be able to add an extension at a later date under your permitted development rights. However, some councils are wise to this and make it a condition of a planning approval that you give up your PD rights - although this policy may be overturned at a later date if you wait long enough.

I forgot to mention that Enfield's new CIL policy has not actually been approved. There is still due to be an Examination in Public starting 5 November, although the council may already be applying it in the assumption that it will be approved. I would check with Enfield whether this £53K figure is using the old basis for calculation or the new post-Examination one.

by Angela Cooper

16:19 PM, 10th October 2015, About 6 years ago

Are you in England/Wales? In Scotland a fee called Developer Contribution is sought for every new dwelling and based on the number of bedrooms and housing area. This fee used to be waivered for Section 75 planning applications but these are very uncommon now. The fee is also waivered if the new dwelling replaces an existing that has recently paid council tax. Discounts were given for energy saving measures but these discounts were removed a number of years ago. The fee is payable once your permission is about to be signed off and your permission will be held until the fee is paid.

by Stephen Reynolds

16:24 PM, 10th October 2015, About 6 years ago

This discussion prompted me to look at my local authorities (London Hackney) cil policies. 190 quid for the la another 35 per square metre for London mayor. The scheme I am looking at is 400 sq so almost 100k contribution. So its definitely going to be a self build project that we will be living in..

by Pete Moore

12:17 PM, 12th October 2015, About 6 years ago

Hello Tony, with regards to your statement...."£53,000 in CIL and S106 for a small 112m2 house is an incredibly high level of tax. Are you absolutely sure this is right?" ......This was a rough figure that was given to me by the pre-planning advice staff in enfield council after she looked at the draft plans.
We will sure go down the self-builder route and get a better idea of Enfield's charges before hand, should we decide to proceed. Thanks once again for you input and the web links you've provided.

Stephen RC7's contribution in Hackney - £100k - wow!!
Angela - we are based in England.

by matchmade

13:45 PM, 12th October 2015, About 6 years ago

Reply to the comment left by "Pete Moore" at "12/10/2015 - 12:17":

Southwark are charging £400 per m2 in the CIL on the area to the south of Chelsea Bridge.

Wokingham, which includes large parts of Reading, are charging £365 per m2 flat rate across the entire borough, irrespective of variable house prices in different areas. Two 4-bed houses I built last year were 175m2, so the CIL would have been £63,875 per house, out of the eventual sale price of £500K each. Fortunately I only had to pay S106, which was a more viable £15,500K per house.

by Pete Moore

8:55 AM, 14th October 2015, About 6 years ago

Hello Tony,
I didn't know you built houses. I'm quite new to this and I may need some advice (if possible) regarding CIL etc and how to avoid cowboy builders if my planning is successful.
Just in case, is there an email I can reach you on or me on pim777@gmail.com. I tried clicking your profile but nothing happened.
Thanks.


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