Community Infrastructure Levy: Homeowners

Matthew Pennycook Excerpts

Wednesday 29th April 2026 Westminster Hall

[The Minister for Housing and Planning (Matthew Pennycook)]

It is a pleasure to serve with you in the Chair, Mr Turner. I warmly congratulate the right hon. Member for Godalming and Ash (Sir Jeremy Hunt) on securing this important debate, and I commend him on his thoughtful opening remarks and the determination with which he sought redress for about 50 families in his own constituency and families affected across the rest of the country.

I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for his well-argued contribution and the shadow Minister, the hon. Member for Orpington (Gareth Bacon), for his remarks. I am also grateful to the CIL Injustice Group for helping to ensure this issue gets the national recognition it deserves and bringing the cases in question to our attention.

At the outset, as the shadow Minister just mentioned, I want to stress that the Government appreciate fully that noncompliance with procedural requirements relating to exemptions for household applications under the Community Infrastructure Levy Regulations 2010 have had financial consequences for some owners. In a number of cases, those financial consequences have been extremely severe.

The Government recognise and take extremely seriously the concerns that have been raised about CIL liabilities applying to householder and self-build developments. We have been giving very serious consideration to the issue over many months. I have welcomed the engagement I have had with the right hon. Member for Godalming and Ash and the hon. Member for Farnham and Bordon. I am pleased to have the opportunity to set out the Government’s proposed intentions in relation to it. As the right hon. Member for Godalming and Ash was able to secure a 90-minute debate, I have the time I need to address all his points.

Hon. Members will appreciate that it would not be appropriate for me to comment on specific cases, nor on the approach taken by individual local planning authorities to those cases and the particular facts and circumstances that applied. I appreciate that that is somewhat frustrating, but I am afraid that it is the Government’s position. It remains the case that local planning authorities are ultimately responsible and accountable for their own decisions on charging and enforcement of CIL. The Government none the less expect, as I have reiterated on numerous occasions, charging authorities to consider each case very carefully and in accordance with their legal obligations.

Hon. Members will forgive me if I provide a brief overview of the CIL system, but I think it is important in the context of the debate. The CIL legislative framework was introduced through the Planning Act 2008 and subsequent regulations were made under those powers in 2010. It is a local charge that local planning authorities can levy on new development in their area to help fund the infrastructure needed to support development of their area.

CIL receipts can be used to fund a wide range of infrastructure across the charging authority’s area. That includes transport schemes, education and health and social care facilities, blue light infrastructure, flood defences, green spaces and other leisure facilities. More than half of local planning authorities in England charge CIL, and the Government are committed to strengthening further and improving the system. It supports development by funding the provision, improvement, replacement, operation or maintenance of infrastructure, which brings significant benefits for local communities.

Turning to the legislative context, CIL is intended to be a clear and transparent system providing certainty to developers about what kinds of development are liable to pay the rates that will apply and when payment is due. Before charging CIL, a local planning authority must consult on a draft charging schedule, which sets out the authority’s proposed local set levy rates. In answer to the point made by the Liberal Democrat spokesperson, the hon. Member for Taunton and Wellington (Gideon Amos), we expect that to take into account issues such as viability. The charging schedule must then undergo independent examination in public. It must be formally adopted by the local authority and published on its website.

In addition to the procedures that must be followed before an authority can charge CIL, the legislation sets out what steps must be taken to collect CIL payments. After the grant of planning permission, the CIL charging authority, more often than not the local planning authority, must issue a CIL liability notice as soon as practical, which sets out the CIL liability for the proposed development. A developer must normally pay the CIL liability within 60 days of commencement of development or within the terms of the charging authority’s published instalments policy.

Charging authorities set their own levy rates, which undergo public consultation and independent examination. The levy rates are set out in charging schedules, which are published on the relevant authority’s website. Authorities can specify some types of development as being subject to a zero levy rate. Further to that, development of less than 100 square metres will not be liable for CIL unless the development consists of one or more dwelling. Other types of development can also be subject to a specified exemption or relief from CIL. That includes social housing and charitable development.

The CIL regulations were amended in 2014 under the coalition Government to introduce express exemptions for individuals who build their own homes, undertake extensions of more than 100 square metres to their existing homes, or construct a residential annexe within the grounds of their homes. To secure those exemptions, the regulations made in 2014 require that applicants must apply to the relevant CIL charging authority and receive confirmation that the exemption has been granted before development commences. That is to ensure that both the householder and the local authority are clear about any CIL liability or exemption granted before commencement of the build. That is necessary because, once commencement of development occurs, the levy becomes payable in accordance with the levy payment requirements.

The CIL regulations were designed to provide transparency, certainty and consistency for local planning authorities and developers. The procedural requirements are intended to secure those aims. As is typical for levy or tax regimes, they require that any exemption from payment is claimed through a formal application in good time. This approach helps to provide clarity on the CIL liability prior to the commencement of development, and guards against abuse by those who might seek to game the system or by those who are not genuine applicants—in this case, self-builders and residential developers.

Turning to the matter at hand, however, the Government have become increasingly aware that, in some cases, that balance has not always been achieved in practice. Therefore, it is right that we pause, reflect and consider whether regulatory changes are needed.

To obtain an exemption, a householder must first assume liability for CIL. The next stage is to formally apply to the CIL-charging authority for an exemption. Both processes require the submission of forms prescribed by the Secretary of State that are available on the planning portal. The developer must wait to be notified by the CIL-charging authority of its decision on the exemption claim before development can commence.

The Ministry of Housing, Communities and Local Government publishes comprehensive guidance on CIL, which is available on the gov.uk website. This guidance also refers to the relevant forms that must be completed. Apart from those who are building residential extensions, developers are required to serve a commencement notice to the charging authority; again, this must occur prior to commencement of development. This is for good reason—to ensure that the charging authority is aware of when the building is to commence, because that triggers the payment of the levy.

As hon. Members have highlighted, failure to complete the necessary processes before works commence on a site has resulted in some homeowners and self-builders losing their eligibility for an exemption. In such cases, the full CIL charge has been imposed. Sometimes, it has been payable immediately, with late payment interest and surcharges also applied, as was mentioned earlier.

The Government appreciate that compliance with the process requirements of CIL can appear complex, particularly for developers who might not otherwise be involved in planning and development on a regular basis, or who do not have professional builders or advisers involved in the process. A householder developer might not be aware of their CIL liability until after planning permission stage, when a levy liability notice is issued by the authority. They might not fully appreciate the consequences that arise from commencing their development between permission being granted and commencement taking place.

Furthermore, the nature of the regulations means that developments that receive retrospective planning permission under section 73A of the Town and Country Planning Act 1990 cannot benefit from an exemption because, in planning terms, this is the grant of a new planning permission. A section 73A permission is treated as having commenced when that permission is granted. As a result, any exemption previously obtained does not carry over and it is not possible to comply with the procedural requirement of applying for an exemption before commencement.

I want to make it clear that local planning authorities are operating within a prescribed statutory framework. Many authorities administer CIL exemptions carefully and conscientiously, often supporting householders through what can seem to be a complex process. That said, we have identified an important opportunity to provide greater clarity and flexibility for applicants and charging authorities.

Let me set out the next steps. Having considered the concerns that have been raised with me—primarily by the right hon. Member for Godalming and Ash, but also by others, including the hon. Member for Farnham and Bordon, and my hon. Friend the Member for Dagenham and Rainham (Margaret Mullane)—I am pleased to confirm today that the Government intend to consult on proposals to amend the CIL regulations, in order to improve the process for obtaining householder development and self-build exemptions in the future.

Through the forthcoming consultation, the Government will put forward proposals aimed at improving outcomes for householders and self-builders, while safeguarding the integrity of the CIL system and ensuring that local planning authorities can properly administer, scrutinise and enforce that system. We want to ensure that in the future, the system minimises the opportunity for procedural errors and that, when errors are made, it does not impose disproportionate penalties. We also want to prevent homeowners and self-builders from incurring significant and unexpected CIL charges, which, as we have heard today, can have significant consequences for individuals and their families.

We are also mindful of the need to ensure that any revised process continues to help local planning authorities to properly administer CIL in an effective way and to ensure that CIL liabilities are discharged appropriately. After all, as has rightly been noted today, CIL remains a vital system to support the development of an area by funding essential local infrastructure.

I appreciate that hon. Members will want to engage carefully with the detail of these proposals once they are published. The Government aim to publish a consultation on the proposals as soon as possible. Although I am loath to give a specific date, as Ministers always are, I anticipate being able to do so before the summer recess.

Before I conclude, I will briefly address what I know is probably the biggest concern that exists, which is the issue of retrospectivity. I recognise that many hon. Members who have spoken today will be concerned not only about what we do in future to amend the regulations, but about how proposals will help constituents who have already incurred a CIL charge as a result of non-compliance with procedural requirements for securing an exemption, arising from the way the regulations were framed in 2014. I am afraid I have to repeat what I said earlier: I cannot comment on individual cases and facts that are not known to me, nor on the approach taken by specific charging authorities, but I want to reassure hon. Members here today that we take such concerns very seriously. They are actively informing our work to reform the system going forward.

The regulations in question have been in force for more than a decade and there will inevitably be a significant amount of variation between cases. There are limits on what the CIL legislative framework can do in such a context, but I remain committed to addressing those concerns in a revised system going forward, and I am more than happy, as I have been striving to do over recent months, to keep hon. Members with an interest in this issue and whose constituents are affected, fully updated. It is certainly not the case that when it comes to those already affected we intend to do nothing.

I look forward to updating the House in due course in respect of the proposed steps I have set out today and in respect of the consultation and when hon. Members will have a chance to fully engage. I look forward to receiving feedback on the forthcoming proposals and debating the amending regulations before they are made. I thank hon. Members again for speaking up for their constituents and their interest in this extremely important issue.

[Karl Turner (in the Chair)]

I call Sir Jeremy to wind up—you may take your time.