diff --git a/pre_commit/clientlib/validate_config.py b/pre_commit/clientlib/validate_config.py
index 4f2caf1b..3624e62b 100644
--- a/pre_commit/clientlib/validate_config.py
+++ b/pre_commit/clientlib/validate_config.py
@@ -70,7 +70,6 @@ def validate_config_extra(config):
                 raise InvalidConfigError(
                     '"sha" property provided for local hooks'
                 )
-            repo['sha'] = 'local'
         elif 'sha' not in repo:
             raise InvalidConfigError(
                 'Missing "sha" field for repository {}'.format(repo['repo'])
diff --git a/pre_commit/repository.py b/pre_commit/repository.py
index db384c14..165961f9 100644
--- a/pre_commit/repository.py
+++ b/pre_commit/repository.py
@@ -11,6 +11,7 @@ import pkg_resources
 from cached_property import cached_property
 
 from pre_commit import five
+from pre_commit.clientlib.validate_config import _LOCAL_HOOKS_MAGIC_REPO_STRING
 from pre_commit.clientlib.validate_config import is_local_hooks
 from pre_commit.clientlib.validate_manifest import MANIFEST_JSON_SCHEMA
 from pre_commit.jsonschema_extensions import apply_defaults
@@ -39,7 +40,10 @@ class Repository(object):
     @classmethod
     def create(cls, config, store, owner):
         repo_path_getter = store.get_repo_path_getter(
-            config['repo'], config['sha'], owner
+            config['repo'],
+            _LOCAL_HOOKS_MAGIC_REPO_STRING if
+            is_local_hooks(config) else config['sha'],
+            owner,
         )
         if is_local_hooks(config):
             return LocalRepository(config, repo_path_getter)
diff --git a/tests/languages/all_test.py b/tests/languages/all_test.py
index 73b89cb5..7a7af5cb 100644
--- a/tests/languages/all_test.py
+++ b/tests/languages/all_test.py
@@ -11,10 +11,15 @@ from pre_commit.languages.all import languages
 @pytest.mark.parametrize('language', all_languages)
 def test_install_environment_argspec(language):
     expected_argspec = inspect.ArgSpec(
-        args=['repo_cmd_runner', 'version', 'additional_dependencies'],
+        args=[
+            'repo_cmd_runner',
+            'version',
+            'additional_dependencies',
+            'is_local_hook',
+        ],
         varargs=None,
         keywords=None,
-        defaults=('default', ()),
+        defaults=('default', (), False),
     )
     argspec = inspect.getargspec(languages[language].install_environment)
     assert argspec == expected_argspec
diff --git a/tests/repository_test.py b/tests/repository_test.py
index 3ac4cf70..5b0fc278 100644
--- a/tests/repository_test.py
+++ b/tests/repository_test.py
@@ -580,7 +580,6 @@ def test_install_local_ruby_hook(
 ):  # pragma: no cover (non-windows)
     config = config_with_local_hooks('ruby')
     config['hooks'][0]['additional_dependencies'] = ['thread_safe']
-    validate_config_extra([config])
     repo = Repository.create(config, store, '/path/to/repo/')
     repo.require_installed()
     with ruby.in_env(repo.cmd_runner, 'default'):
@@ -594,7 +593,6 @@ def test_install_local_python_hook(
 ):  # pragma: no cover (non-windows)
     config = config_with_local_hooks('python')
     config['hooks'][0]['additional_dependencies'] = ['mccabe']
-    validate_config_extra([config])
     repo = Repository.create(config, store, '/path/to/repo/')
     repo.require_installed()
     with python.in_env(repo.cmd_runner, 'default'):