Community Infrastructure Levy: Homeowners

Kit Malthouse Excerpts

Wednesday 29th April 2026 Westminster Hall

[Sir Jeremy Hunt]

The hon. Member is absolutely right, and he is foreshadowing what I will propose as one of the solutions to this issue: that homeowners should be excluded from the potential ambit of CIL altogether, because that was not its intention. It is a loophole that is being exploited, and I hope to explain why some councils have been so keen to exploit that loophole. We need to remove the root cause if we are going to deal with this issue.

[Kit Malthouse (North West Hampshire) (Con)]

My right hon. Friend is laying out a compelling illustration of the injustices to individuals that this highly complex charge is causing. As he moves on to his solution, will he also reflect on the macroeconomic impact of this complexity and deterrence? I was Housing Minister for a year. Sadly, in those 12 months, I did not get round to sorting out this mess, but it was obvious to me that the small builder sector, which used to produce over 50% of the homes in this country, had been decimated by the crash and never returned. This disincentive to the kind of work that would encourage a really strong small builder sector, which could then contribute more to our economy, is both a brake on growth and a brake on the wider housing aspirations that both Governments have had over the last few years.

[Sir Jeremy Hunt]

I absolutely agree with my right hon. Friend, who has much more experience of the housing sector than I do. He will know that countries like France—not very far away—that have been much more successful than us in building more houses also have a flourishing small builder sector. In this country, because of the enormous costs involved in the planning process and often the land, it is much harder for small builders to get involved. Of course, one of the other advantages of small builders is that they are more likely to get consent from local communities, because they are often from those local communities. I agree with my right hon. Friend entirely: that is one of the unintended consequences of the problems we have with the community infrastructure levy regime.

CIL was drafted with very strong teeth to ensure that developers actually pay up, but for ordinary members of the public trying to do an extension, these Orwellian processes can be utterly terrifying. Some councils—not my own Waverley borough council, alas—recognise the inflexibility of the regulations and have taken a soft-touch approach to prevent homeowners from being captured. To its credit, West Berkshire, which as it happens is also a Lib Dem council, implemented a discretionary review and refunded £400,000 to affected householders. Others have not. I recognise that the difference in councils’ approaches makes the Minister’s job more difficult.

So how should we fix the issue? First, we need to reform the highly complex CIL legislation to distinguish between commercial developers and householders. The problem with a system that is based entirely on the floor area of a project is that even a small increase in the size of a project—just a couple of extra metres on a patio—can suddenly mean that an ordinary homeowner is required to get planning permission, perhaps retrospectively, and can become liable, and they may not know it at the time. Homeowners should be outright excluded from the reach of the community infrastructure levy.

Secondly, even in the absence of legislation, we need clear guidance from the Government to local councils so that no homeowners anywhere are charged for the community infrastructure levy. Thirdly, we need an effective mechanism for redress and the ability to correct genuine mistakes after a liability notice has been issued. Sadly, zero rating CIL liability does not work because a charge remains on the land, which may render the property unsaleable, so the Government need to find a way not just to avoid injustice but to secure justice for the hundreds of families who have been wronged to date by the problems in the system.

Finally, we need to recognise that the root cause of the problem is that councils such as mine have been collecting the community infrastructure levy not just to build infrastructure but so that they can use the interest from unspent CIL as revenue. An estimated £9 billion is sitting in council accounts from unspent contributions by developers, of which an estimated £2.2 billion is unspent CIL. That means that some councils are effectively funding their core services from the human misery of their council tax payers. At a minimum, rules should specify that interest from unspent CIL should go back into the CIL account to avoid a perverse incentive for councils to do the wrong thing.

British democracy rests on the principle of consent and fairness, both of which demand justice for those caught unfairly by the CIL system, which was never designed to capture them. All those people deserve clarity, and this should be prevented from happening again. I know the Minister and many other hon. Members here today want just that, and I look forward to hearing the Government plans.