Special report: The true cost of building a home

Photo: MSMP101412-006ow'Owner of Uppingham Antiques Centre, Nick Grindley, is campaigning against Section 106 agreements after he was asked to pay �50,000 for wanting to build a house behind his shop.
Photo: MSMP101412-006ow'Owner of Uppingham Antiques Centre, Nick Grindley, is campaigning against Section 106 agreements after he was asked to pay �50,000 for wanting to build a house behind his shop.
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DESIGNING and building a house where you and your family can settle is a dream many share.

But for some Rutland residents, that dream was transformed into a nightmare when they discovered the cost of a new council policy.

Photo: MSMP120912-002ow'Rose and John Dejardin, from Wing, wanted to build a smaller home on their land but have changed their plans after finding out about the Section 106 agreement.

Photo: MSMP120912-002ow'Rose and John Dejardin, from Wing, wanted to build a smaller home on their land but have changed their plans after finding out about the Section 106 agreement.

John and Rose Dejardin wanted to build a home in which to retire in the grounds of their current property in Top Street, Wing.

The couple wanted to downsize and save money at the same time by building an eco-friendly house, selling their family home to pay for the project.

But they had a nasty shock when Rutland County Council planners asked them to agree to a series of charges totalling almost £45,000.

The charges, known as a Section 106 agreement, are designed to minimise the impact of a development on its community and can fund road improvement, school places, affordable housing and more.

They are typically applied to larger developments where an influx of housing and people would put extra strain on services and infrastructure.

But last year, Rutland County Council changed its policy to require Section 106 agreements to be signed on any application to build.

Mr Dejardin, 63, said: “It came as a complete shock. I knew about the charges for many years because I used to work in the development world.

“But I never expected there to be charges which would apply to a single home development on my own land.”

What made the news of the charges even worse was the knowledge that if the Dejardins had applied for planning permission a year earlier, they would not have had to pay.

They have now had to rethink the development and have even considered moving out of Rutland to South Kesteven, which only applies Section 106 agreements to developments of five houses or above.

Mr Dejardin added: “We are still trying to decide what on earth we are going to do.

“We are both in our 60s and it was always part of our pension plan that we would downsize. Selling the house and moving to a smaller, more eco-friendly home was a crucial part of our retirement.

“To lose £45,000 from that is crazy.”

Uppingham businessman Nick Grindley, 53, wanted to build a four bedroom house on his land behind the Uppingham Antiques Centre, in High Street East.

He was asked to pay £50,000 in a Section 106 agreement and refused to sign, so Rutland County Council refused him planning permission.

The council also said the house would be an “over-dominant feature in the street scene”.

Mr Grindley began campaigning against the policy. He said: “People have been coming to me saying they have been stopping building projects because of this. I think at least 40 have been withdrawn but many more have not been taking place.

“Housebuilding provides work for local people. But small builders are having projects held up because of this. I think they should let people get on with building and get some jobs back.”

Rutland County Council maintains the charges are fair, and says developers are free to challenge them if they disagree.

A spokesman said: “Section 106 payments have been around for many years and money generated is reused in the local community to support local services - a recent example being the use of S106 money to develop a joint library/doctors surgery in Ketton.

“It seems to be generally accepted that larger housing developments should contribute to local infrastructure in this way. However, the council recognises that some small developments may believe they have exceptional circumstances.

“If a developer believes this to be the case, they can request the council submit their project to an independent economic test to get a neutral perspective over whether their proposed contributions are fair and viable.”

While South Kesteven District Council and East Northamptonshire District Council have thresholds of five and 10 homes respectively before Section 106 agreements are required, Peterborough City Council asks for payments on anything from a single house upwards, although this is judged on a case-by-case basis.

But developers will soon be required to pay a fee regardless of the number of houses they want to build when the new Community Infrastructure Levy is introduced.

Councils are consulting on the levy which will be in place across the whole country by April 2014. It replaces all but the affordable housing part of the Section 106 agreement, is non-negotiable and applies to extensions as well as new builds.

Ross Thain is a director of Ross Thain & Co, a Stamford firm which specialises in chartered surveying and deals with more than 100 planning applications per year.

He said: “I think that everyone acknowledges and understands that developers should make a contribution to both the local community and infrastructure generally.

“The problem is that the timing of the introduction of a non-negotiable levy is spectacularly wrong, bearing in the mind the stage of the economic cycle in which we are at present.

“Local developers, and more particularly landowners who own plots, are having to adjust their fiscal expectation to reflect both the CIL and the S106 affordable housing costs. Both of these sums come off the bottom line and have stifled a number of local developments”.