How Much Should Building Control Really Cost?
The Government has issued a consultation paper setting out detailed proposals to change the local authority building control charging regime. The changes aim to introduce more flexibility, accuracy and transparency into the way local authorities charge for building control with the intention of achieving fairer charges for everyone. Everyone involved in development work, from local authorities, to property owners, developers and builders should be aware of the proposed changes and make their views known by 25 June 2009.
How does the current system work?
Local authorities in England and Wales are able to charge for carrying out their building control functions. The theory behind this is that it is the person who uses the building control services who should pay for them rather than the cost being borne by everyone who pays Council Tax.
A person carrying out building works that require building regulations consent can choose either to use an Approved Inspector from the private sector to check that the works comply with building regulations or they can use the local authority to do so. Approved Inspectors have no restrictions on how much they charge and can make a profit from the work. The Government allows local authorities to set their own fee levels for building control work in order to enable local authorities to reflect their actual costs in the amount they charge and also to encourage efficiencies in the building control service, reduce charges and give local authorities more opportunity to compete with Approved Inspectors on a level playing field.
However, there are certain types of building control work that only local authorities are allowed to do and whilst Approved Inspectors can refuse to accept an application for building control consent, a local authority cannot. Given this effective monopoly position the Government imposed restrictions on the factors that local authorities could take into account in fixing their fee levels by way of the Building (Local Authority Charges) Regulations 1998. The regulations require charges to be set so that the total income from charges fully recovers the estimated aggregated costs of carrying out the specified building control function over a continuous three year period. The charges should relate to either the estimated cost of the building work, and/or the use/type of building work or for smaller domestic projects, the floor area of the building or extension.
Problems with the current system
When the Government consulted on the future of building control in March 2008, it received feedback that the charging regulations had become too inflexible and restrictive and did not enable local authorities to compete effectively with private sector Approved Inspectors and did not provide best value for the public. Local authorities have not been able to match their charges to the actual costs of carrying out building control work resulting in under charging for some work and over charging for other work. For example, as the charges relate to the estimated cost of building works, a project that uses more expensive materials will incur a higher building control fee than the same project which uses less expensive materials despite the fact that the building control input will be the same for both projects. Equally, two projects that cost the same amount and therefore attract the same level of building control fees may require vastly different amounts of building control input, for example, redesigning an internal layout of a building to add a toilet requires far more supervision than installing a new glass shop front.
The regulations require the local authority to ensure that their costs are covered by the fees. As it is not always possible to tell how much those costs will be, for example they will be increased if additional supervision of a bad builder is required, local authorities have erred on the side of caution by setting charges at a higher level to make sure they cover their costs.
As well as addressing these perceived failings in the current regulations, the charging structure needs to be amended to reflect the new way in which building control will be carried out when the Government introduces a risk assessment approach to building control work. The intention is that local authorities will focus their resources on higher risk building projects and adopt a lighter touch approach to low risk projects.
Proposed changes
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Local authorities are to be able to relate their building control fees to the costs of carrying out building control on individual projects;
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In addition to pre-fixed charges, local authorities are to be able to set charges for individual projects where appropriate ie for large projects;
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Introduction of more factors that local authorities can take into account when setting fees to improve flexibility of the system;
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More discretion for local authorities to not charge or to issue reductions or refunds in charges;
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A new power for local authorities to increase building control fees where appropriate;
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Removal of the current link between charges for carrying out different building control functions;
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Removal of current restrictions for charging for new housing and domestic extensions;
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Clarification on the exemption from charging for building control work for disabled people;
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Clarification on the requirement to publicise charging schemes;
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Clarification on the position when local authorities enter into joint arrangements or partnerships with each other to carry out building control functions;
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Introduction of new accounting, auditing and monitoring requirements;
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Removal of the derogation principle;
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Consideration as to whether local authorities should be able to charge for other building control functions that are not currently listed as chargeable activities in the regulations; and
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Increase fees for determination applications submitted to the Secretary of State.
This article was first published in the Property Law Journal on 16 May 2009.
