From today (24 February 2014) self-builders will be exempt from paying a levy which until now was placed on most new buildings over a certain size.
The previous charge added considerable cost in some cases to the expense of building a home. For example someone building their own 4-bedroom house that is 150 square metres in size could be liable to pay £15,000 in community infrastructure levy if a council was charging £100 per square metre for residential development in that area.
The axing of the levy for people building their own home is part of the government’s determination to boost housing supply and help aspiring self-builders get their home off the ground.
The relief from the community infrastructure levy will cover homes that are owner-occupied and built or commissioned by individuals, families or groups of individuals for their own use.
Communities Secretary Eric Pickles said:
Building your own home is always a challenge and we are doing what we can to help people realise their dream and provide a home for their family. This change will save self-builders thousands of pounds and help many more in the future.
By boosting the numbers of people building their own home we can help increase the number of new houses built each year in this country and support local businesses. There are too many levies and charges on housing. By cutting these, we can help build more homes.
Ted Stevens, chairman of the National Self Build Association said:
It’s great news that the community infrastructure levy exemption for self and custom builders is now being implemented. We estimate that about 1 in 8 self-build projects has been ‘mothballed’ over the last 2 years, because of the impact of this new charge. So we anticipate the exemption will have a significant impact on self-build starts, with 2,000 to 3,000 homes coming off the shelf, and starting on site in the next few months.
This is good news for the people who want to build their own homes and it will also be good news for the supply chain and local construction related businesses that support the self-build sector.
Extensions and family annexes over a certain size will now be exempt from the levy and the government also intends to consult on removing Section 106 tariff charges from self-build properties too. In addition from April there will no longer be a Council Tax surcharge on family annexes.
Exempting self-builders from the levy is the latest in a range of measures to boost the number of people building their own home. They include:
making is easier to get a self-build mortgage, the government has been speaking to lenders and 26 of them are now offering self-build loans; gross self-build lending is predicted to increase by almost half between 2012 and 2015 to £1 billion a year
freeing up more surplus public sector land for self-builders with the Homes and Communities Agency to bring forward a range of sites for custom build homes
introducing a £30 million Custom Build Homes Fund which makes available repayable finance for larger multi-unit projects and grant funding for community self-builders who can now apply for a share of £65 million from the Affordable Homes Guarantees Programme
planning guidance that makes clear councils should help self-builders and establish demand in their area; this includes compiling a local register of people wanting to build a home so they have priority when new brownfield sites become available
The community infrastructure levy can be charged on new developments by the local authority to help fund infrastructure that the council, local community and neighbourhoods want. It gives councils more flexibility to set priorities for spending the money and gives developers more certainty ‘up front’ about how much they will be expected to contribute.
People keen to build their own can find more information on the self-build portal.
Self-build homes are homes built or commissioned by individuals or groups of individuals for their own use, either by building the home on their own or working with builders. Custom home building typically involves individuals commissioning the construction of a new house from a builder, contractor or package company or, in a modest number of cases, physically building a house for themselves.
Laying the foundations: a housing strategy for England sets out the government’s plans to support social mobility and get the housing market - and in particular new house building - moving again, including a custom build homes programme to support and encourage more individuals and communities to build their own homes.