London Emergency Housing Package - CIL Relief

Meltdown expected... But not to be applied to the faraway towns!

Further to the previous announcements in October 2025 and the earlier consultation between November 2025 and January 2026, MHCLG is seeking further input from the Property and Construction sectors on 'Emergency Measures' to tackle the slow London Housing market and accelerate growth in housing starts and completions.

The consultation document confirms that "the Government remains committed to the benefits of the CIL regime for delivery of local infrastructure over the long-term, in London and across the country."  Whilst reiterating that "the overarching aim of CIL is to ensure that the costs incurred in supporting the development of an area to be funded (wholly or partly) by owners/developers of land in a way which does not make development of the area economically unviable"

This time-limited London CIL relief is aimed at encouraging more schemes to come forward with greater levels of affordable housing than would otherwise have been the case, and for these to be built out and delivered as quickly as possible.

The proposed design of the relief is reflective of these aims, as well as the fact that CIL remains an important funding source for boroughs.  The proposed relief therefore remains partial, and conditional on developments meeting targeted qualifying criteria and providing the required viability evidence.

Relief is proposed to be available for schemes which (provided all other proposed qualifying criteria are met) deliver at least 20 per cent affordable housing.

Before proposing a time-limited relief, the Government considered whether alternative measures could effectively address viability challenges affecting residential development in London at pace, while supporting the delivery of affordable housing.

The Government considered whether a discretionary relief could provide an effective response. Discretionary Exceptional Circumstances Relief (ECR) (Reg.55) is already available within the CIL framework but has seen limited uptake in practice.  Most London boroughs do not have an ECR policy in place, which is a prerequisite for granting the relief. In addition, the grant of relief remains subject to a case-by-case discretionary decision, which reduces certainty for applicants.**

MHCLG also considered deferred payment arrangements. Charging authorities can already permit CIL liabilities to be paid by instalments where an instalments policy is in place.  While such arrangements may provide cashflow benefits to developers, they have a limited impact on development costs relative to the grant of relief; meaning they considered the impact would not be sufficient to achieve the intended impact for housing delivery.

Lastly, they also considered whether changes to the operation of CIL indexation could alleviate viability pressures in London.  However, the impacts of indexation vary significantly across London boroughs, reflecting a difference in charging schedule rates (and time spans since adoption).  Removing or altering how indexation currently operates could therefore produce unequal impacts between boroughs - as well as create further confusion in the calculation of the 'correct' indexed CIL rates.

**Reg.55 could readily be made mandatory for all Local Planning Authorities (LPAs) - (and modified too) so as to facilitate LPAs (throughout UK and not just London) to be more cognisant of individual project circumstances to ensure viability.

To incentivise greater levels of affordable housing where possible these measures seek to link the relief to the level of affordable housing delivered.  While 50% relief is proposed where 20% affordable housing is delivered by a development, this increases (linearly) with affordable housing levels – to a maximum of 80% where 35 per cent or more affordable housing is delivered from the scheme.

The first consultation proposed that the relief should not apply to development on ‘excluded land’, defined as:

• Land which has been designated Green Belt

• Land which has been designated Metropolitan Open Land (MOL)

• Land which is a park, recreation ground, allotment, golf course or other locally designated open space.

Recognising that a 'blanket exclusion' could lead to unintended outcomes for schemes that span different land types.  The Government has now proposed that developments comprising multiple land typologies could remain eligible where only a limited proportion of the site constitutes 'excluded land', and suggested a possible threshold of between 10% and 25% might apply.

There is still a requirement that the total BCIL before relief (on housing - a clarification on the previous wording) to be of £500,000 and above to be eligible!  This excludes a high proportion of infill and brownfield/regeneration sites that deliver considerable numbers of housing units each and every year, but at a smaller scale to the 'volume housebuilders', some of whom have already announced pausing their development pipelines due to the economic position and viability concerns! 

The £25,000 application fee is also still being proposed - arguably to assist LPAs resource the review of viability - although MHCLG has provided a 'model' spreadsheet and suggest Statutory Declaration wording to help standardise the approach and ensure consistency.

E³ Consulting has advised on CIL since 2014 and has acted upon a very wide range of matters (for developers, social housing operators, charities and private individuals) across all London Boroughs. 

We shall continue to review and assess the full proposals and intend to submit a response in due course. 

The consultation closes at 23:59Hrs on 18 September 2026 

If you wish to discuss specific queries relating to the above information any property tax matters, then please do contact the team on 0345 230 6450 or [email protected].  We look forward to speaking with you soon.