Homeowners in Waverley hit with controversial Community Infrastructure Levy bills could be in line for compensation after the Government confirmed councils have discretion to make ex gratia payments in exceptional cases.

In a letter to council leaders across England, Housing Minister Matthew Pennycook said the Government would also consult on changes to prevent householders and self-builders who qualify for exemptions being caught out by procedural errors.

The announcement follows years of campaigning by affected residents, some of whom have faced bills up to hundreds of thousands of pounds after procedural mistakes meant they lost exemptions for self-builds or home extensions.

The Minister acknowledged that some homeowners had incurred significant charges despite meeting the qualifying criteria for exemptions because they had not applied for, or received, confirmation before work began, as required under regulations introduced in 2014. He also recognised that councils had taken different approaches to communicating how the levy operates and that the circumstances of individual cases varied.

The Minister's letter states that while councils have a legal duty to collect Community Infrastructure Levy where it is due, they have discretion over enforcement and may consider ex gratia compensation payments from their general funds in exceptional cases. Any decision would be for individual authorities to make after considering the facts of each case and taking legal advice.

Waverley Borough Council welcomed the announcement, saying it had consistently urged ministers to review the regulations because the current legislation could produce disproportionate outcomes in some cases.

Cllr Liz Townsend, portfolio holder for planning and economic development, said: "We welcome the Government's acknowledgement that aspects of the current legislation need to change and its commitment to consult on reforms that will help prevent similar situations arising in future.

"We've long recognised that some homeowners have experienced difficult circumstances under the current Regulations. That's why Waverley has consistently called on government to review the legislation, as we believed the only lasting solution was to change the law itself. We're pleased the Government has now committed to doing just that."

The council said the Minister's letter confirmed it had administered Community Infrastructure Levy in accordance with the regulations while also clarifying that authorities have discretion over how and when they enforce payments. However, it did not say whether it would consider making ex gratia compensation payments to affected homeowners.

Waverley Conservatives said the announcement vindicated years of campaigning on behalf of affected residents and called on the Liberal Democrat-led administration to compensate homeowners.

Cllr Jane Austin, leader of the Waverley Conservative Group, said: "This is an important moment for residents hit by huge bills for self-builds and home extensions.

"Many have suffered major injustice. Homeowners across Waverley have faced life-changing charges because of procedural mistakes despite carrying out developments that would otherwise have qualified for exemption.

"Since these cases came to light, we have sought justice and argued that councils should show discretion and compassion where residents acted in good faith.

"Today's letter is a clear acknowledgement that the Government shares these concerns and highlights the opportunity for resolution."

Sir Jeremy Hunt, MP for Godalming and Ash and former Chancellor, called the Government’s announcement “brilliant news”.

“Today’s intervention from the Housing Minister recognises the unfair impact that Community Infrastructure Levy rules have had on some homeowners, and I want to thank him for taking this issue on and committing to amend the CIL regulations,” he said.

Mr Hunt said residents across Waverley had shared deeply concerning cases of people facing substantial CIL charges, adding that the impact had been "awful and life changing".

While the principle behind the levy was right because communities needed infrastructure to support growth, Mr Hunt said the Government was right to review the regulations where rules intended to support householders and self-builders had instead resulted in severe and unexpected financial consequences because of procedural failures.

"I particularly welcome the confirmation that local authorities retain discretion over enforcement and that compensation may be considered," Mr Hunt said. He also welcomed the Government's commitment to consult on reforms to ensure similar situations did not arise in future.

Mr Hunt urged local authorities, particularly Waverley Borough Council, to urgently review its CIL scheme, under which no-one had yet been refunded.

"Please now ensure residents are treated fairly," he said.

Mr Hunt paid tribute to residents who had campaigned "with persistence and dignity", particularly the CIL Injustice group, and local Waverley Conservative councillors led by Cllr Jane Austin, who he said had "led the charge and fought for change".

"For those who have spent years seeking recognition that the system has not always delivered fair outcomes, today is an important step forward," Mr Hunt said.

Farnham and Bordon MP Greg Stafford also welcomed the announcement and urged Waverley Borough Council to compensate affected residents.

Mr Stafford said: "I welcome the news that our campaign to stop over-zealous councils charging innocent homeowners exorbitant fees has finally succeeded.

"I have seen the distress and financial hardship this has caused for my constituents - something the Liberal Democrats, despite seven years in charge at Waverley, neither recognised nor meaningfully acted upon.

"Today, the Government has confirmed that councils can choose to reimburse those affected. Yet I understand within hours, extraordinarily, Waverley has effectively ruled out making that choice.

"The Conservatives have done the work to secure a clear path to change in the law. The responsibility now sits squarely with the Liberal Democrats to do the right thing."

The Government said it intends to publish its consultation on changes to the Community Infrastructure Levy regulations as soon as possible.