Previously self-builders were required to pay a levy on buildings over a certain size, meaning that a four-bedroom house 150 square miles in size would incur £15,000 if the council was charging £100 per square metre for residential development in the area.
Eric Pickles, communities secretary, 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.”
The relief from the community infrastructure levy covers homes that are owner-occupied and built or commissioned by individuals, families or groups of individuals for their own use.
Extensions and family annexes over a certain size will now be exempt from the levy , while from April there will no longer be a Council Tax surcharge on family annexes.
One in eight self-build projects were estimated to have been ‘mothballed’ or reduced in size over the last two years because of the charge.
Ted Stevens, chairman of the National Self Build Association, said: “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.”
Exempting self-builders from the levy is the latest in a range of measures to boost the number of people building their own home, with the government also introducing a £30 million Custom Build Homes Fund to provide finance for larger multi-unit projects.
26 lenders who were contacted are now offering self-build loans, while gross self-build lending is predicted to increase by almost half between 2012 and 2015 to £1bn a year.
