A controversial infrastructure funding mechanism designed to make property developers contribute toward community facilities has instead caused ordinary homeowners financial distress, while local authorities hold hundreds of millions in unspent funds.
Introduced in 2010, the Community Infrastructure Levy (CIL) was created to ensure builders contribute towards schools, transport, and public amenities.
Homeowners extending their properties can claim exemption, the application process demands meticulous compliance, and detailed paperwork must be submitted before construction begins. However, even minor administrative errors have resulted in devastating penalties. Some homeowners have faced demands reaching £180,000, often with limited appeal options. Some have sold homes, depleted retirement savings, or taken on additional mortgages to satisfy these charges.
One north London resident received a £46,700 bill after completing basement work, claiming his architect never informed him about exemption requirements. After years of silence, authorities revived the demand with accumulated interest exceeding £8,000. Despite paying £25,000 incrementally, he remains liable for the balance.
Another property owner in Berkshire battled a £64,000 charge for seven years after converting a struggling pub into residential units. He maintains that council officials misdirected crucial correspondence and pursued collection despite his eligibility for relief. The prolonged dispute, he claims, damaged his health and required borrowing from personal contacts.
The accumulation problem
Recent analysis reveals that 157 local authorities together collected £557 million through CIL in 2023-24, yet £574 million remains unallocated for specific projects. These funds sit in interest-bearing accounts averaging 4.17% returns, potentially generating £24 million annually for the councils.
Some authorities hold staggering sums: one district council maintains nearly £38 million unallocated, while several London boroughs hold between £20-35 million each. The average council collects £4.1 million but holds £4.3 million without designated projects.
Only 39% of councils have adopted the CIL system, creating dramatic regional disparities. Neighbours separated by administrative boundaries can face vastly different obligations—one paying nothing while another confronts six-figure bills.
Emerging solutions
A handful of authorities have implemented more flexible approaches. One council established a discretionary review system, refunding 18 residents a total of £350,000. Others automatically waive charges for homeowners, accept late paperwork when mistakes appear genuine, or set residential extension rates at zero. However, most councils resist these practices, citing unclear legal authority to forgive liability and pressure from shrinking government funding.
Calls for reform
Industry representatives argue that unspent contributions deprive communities of intended benefits while discouraging home improvements that could stimulate economic growth. Political figures, including a former chancellor whose constituents faced unexpected bills, have engaged housing ministers about automatically exempting primary residences.
The government has acknowledged that councils may accumulate funds for larger infrastructure projects but emphasised the obligation to deliver promised community benefits. Improvements are being sought to ensure the system serves taxpayers more effectively.
However, critics maintain the current approach has strayed from the original purpose of CIL, functioning less as developer accountability and more as a means of revenue generation, that ensnares unsuspecting homeowners in bureaucratic traps while promised community improvements remain unrealised.