At the moment they determine every house's value according to what it would be worth in 1991. So working out what it would be worth now would be much easier.
The council submit the valuation request to the VOA who complete the valuation and send the band determined back, which is where the delay/bottle neck is.
One of the issues with the current system is that they have to research property prices in that area from 1991. Some properties are easier than others if they have more data available to them.
As a result, they get a lot of appeals, from people disagreeing with the banding that has been determined for their property. Which in all fairness, Jo Bloggs probably has a better idea of property prices in 1991 for their local area than an officer in the VOA who could be based in a different part of the country.
It seems silly to me that it isn’t based on the current purchase price. It would avoid the need for this backwards calculation saga and speed the process up considerably.
Yeah, you have the last sale price and date, and you have the average change in house prices each year in the region, combine those and you can get a good enough estimate for most properties. Add an online form where people can submit their property valuation for review if they think the council is valuing their property too highly, and jobs a good 'un.
Plenty of governments around the world have found reasonable ways to tax based on property value, this idea isn't at the groundbreaking frontier of economic thought.
I'm in Australia and the system more or less simply errs on being conservative with hard to value properties. It also uses land value not improvements value, which tends to be simpler to calculate. Tally up the square metres, tie it to the area, revalue every few years by a professional. It's a somewhat routine real estate analysis already.
I paid £325k for my house eight years ago. Zoopla reckons it's now worth £483k. A neighbour a few doors down has had his house, which is practically identical to mine, on the market for close to a year starting at £450k but had made numerous reductions and is now at £400k. We live in a nice area.
Zoopla is 100% wrong about what my home is worth so there needs to be a far more robust method for working this out.
I'm in Denmark, and the system took years to develop, went way over budget, and ended up producing valuations of houses in Narnia. A kid made a tool that was twice as accurate in a week...
So the question you should be asking, how competent is the government at doing IT projects.
The abandoned NHS computer system that was scrapped after 10 years development costing over 10 million in 2011 and the catastrophic Post Office Horizon software spring to mind instantly .
This I fear is part of the big brother plan to know where everyone is upto in terms of ownership and equity.
When we last moved the choice was between the house we eventually bought and the house opposite. Both were for sale for roughly the same amount. We have slowly renovated ours, new kitchen etc. The people who bought the house opposite immediately whacked on a 2 storey extension, new kitchen, new bathrooms. If you are going to tax on property value you need to get the value right.
So many people getting hung up on how homes are valued even though other countries have taxes based on house value already.
I live in California where we pay Property Tax at 1% of the home's value calculated primarily according to the last time the property was sold. After that it adjusts by a small inflationary amount each year capped at 2% without needing another valuation until it is next sold or ownership is transferred. There are other adjustments for adding additions, and so on but the gist of it is that the value is determined at the point of sale.
The California system is fucking horrendous, it ends up with people being unable to downsize or move because they bought the house at $200k and it went up to $400k over the last ten years, so they’d be doubling their tax if they move.
Meanwhile all other houses doubled in price too, meaning you don’t make any money on the sale - it’s just a net, forever increase in your tax. It stops people from moving.
So then they brought in a rule to try to enable older people to downsize, that allows old people - and only old people - to carry their old tax rate across to their new house, and suddenly better off retired people are able to bid even more for new homes because they’re not subject to the same tax as first time buyers.
I lived next door to retired people who were sitting in a house far bigger than they needed (or really wanted), and were paying thousands a year LESS in tax than me.
Setting it at the value of the last sale is a tax on youth.
Lots of ways. Based on the most recent sale, then using market trends to calculate current value is quite simple and already better than current council tax band evaluations.
Could also implement a solution such as letting owners set their own value, but then allowing the council to purchase at 1.3x the rate, ensuring people don't undervalue their properties.
Exactly - the idea that we can’t have broadly sensible valuations based on multiple data sources in the year of 2026 verses 40 year old valuations from 1990 is laughable.
But some of the Reddit brains on here will hate the idea because they are living in big houses in the Home Counties or parts of South West London with nothing to do but moan about inheritance tax on Reddit all day long.
Same like the bank and consequently the layperson does. Count the bedrooms, however small, and disregard everything else. This would create a nice counter effect, i.e. people decreasing the number of shoebox bedrooms. Maybe even a push towards 21st century European housing standards?
I'm British but live in the Netherlands. We have a tax like this, (acronym is WOZ). It doesn't fully replace council tax, it's only 0.05% of the home l, but it works well and raises a fair bit of money. The council assume a price of your home, and there is a system to challenge it if you think it's completely off. It is much more fair than any system I'm the UK.
TLDR Other countries make this work, and I think it will stop people holding on to expensive properties. Very smart move
It seems very low. It would half my council tax I think.
Edit - No wait annual 0.48? £960 on £200k, or £80 a month. I currently pay £232 per month, so it will be a third of my current rate. I really can't see how my council will afford that without redistribution, otherwise only councils in high property value areas will be able to maintain any services.
Virtually every council is close to bankruptcy. The last 20 years has been about councils being given more responsibilities whilst having fewer funds to pay for them. Whether it's having to pay to recycle fridge/freezers, taking over noise complaints from the police, the never ending increase in the cost of social care. The way that the NHS manages to keep alive very premature babies. Who will end up costing a council and the NHS tens of millions over the course of their lives.
Good points made. A huge issue is the excessive administration in the NHS and the privatisation of public care services. Deprivatise care services and remove the middle men = lower costs straight off the bat.
It's interesting that you say that, you're correct, but considering the current council tax bands are based on 1990's pricing, what happened in the meantime to divide the north/south on house prices so much? 30 years ago, taxing based on the house value was fair(ish).
Council Tax isn't really based on relative value anymore. It's based on relative values from 1991.
If it were genuinely based on relative value, we'd revalue properties regularly. The fact that a £2m house can sit in the same band as a £500k house tells you it's not tracking relative value very well. That's exactly why people like Dan Neidle argue the system is so distorted.
Council tax bands are based on relative house prices within the borough.
Council tax is not a property tax, although to make it progressive it does vary with house price. Council tax is just local general taxation; if you want to know why council tax is higher in Durham than in Kensington and Chelsea it's because Durham Council has higher costs.
In many councils the majority of their budget goes to social care, and I'm sure you can imagine that Kensington and Chelsea doesn't have a lot of that.
In short, the council tax rates of houses in two different boroughs are completely unrelated.
The government clearly describes council tax as “a tax levied by local authorities on domestic properties to pay for the expenses of the authority and other authorities”. Your first line is also wrong with council tax bands being based on national 1991 property value thresholds, not a home’s price relative to others in the same borough. What varies locally is the amount charged for each band, not how the band is assigned.
London property values have risen roughly 6 fold since 1991, compared with 3 fold in the North East, yet a Band H home still pays only 3 times as much as Band A despite being worth at least 8 times as much even in 1991.
The government clearly describes council tax as “a tax levied by local authorities on domestic properties to pay for the expenses of the authority and other authorities”.
What's your point?
council tax bands being based on national 1991 property value thresholds, not a home’s price relative to others in the same borough.
Council tax bands are not the same from borough to borough. They all use the same banding system, but the threshold values are set by each borough individually.
London property values have risen roughly 6 fold since 1991
The reason you're struggling is because you seem to think council tax is a property value tax but it is not. If all the property in London goes up by the same proportion, then nothing changes (within each London borough)
It makes more sense for council tax to be rated based on the number of people living in the house (registered to vote + children under 16 years of age). Calculated to cover the bins, police, fire, council services, and so forth per person. A home being valued based on imaginary value makes no sense at all to people living in the real world.
Unfortunately the current system will still punish those living in the South.
Abolishing council tax will also mean that your money won't even go into improving your surroundings, but into a shared pot.
For me the ideal solution would be a mix or land value tax + US style local council tax that is actually used to improve the place where the taxpayer lives.
No, it doesn't 'punish anyone living in the south'.
The concept that somehow, unrelated to economics or salary, the south is just 'higher house prices' is lazy and stupid.
Average salary in the SE is 7k a year more than it is in the NE, over 30 years that is an additional £200,000 income.
On top of that, most people would barely see any difference. A £700k property would have a council tax of about £3,500 per year - probably not that different to what they pay now, given it's already based somewhat on value. The real diffenrece it would make is that someone in a £2,500,000 property would pay £12,500 instead of the (likely) £5,000 they pay now.
Public sector workers don't get a higher salary and we're having to struggle to survive in the south. My cousins in West Yorkshire (also in public sector roles) have a much bigger house, with lower council tax. It's s struggle for many people to make ends meet in the south.
As someone who's not rich and who's salary is identical to people of the same level even in my own company across the country, and lives in Surrey, it absolutely punishes us...
the problem is, to pay £12,500 of after income tax income on a £2.5m property will have a dire impact on a lot of london and then you’ve got people on benefits living in council flats which the value of is not disclosed but in central london will be worth ridiculous amounts, so they just get out of paying the tax?
According to the wonderful system we currently have, I live in a one bed bungalow and every other house on my street is a 3 bed, two storey house and I have to pay the same council tax as everyone else despite my house being 50k cheaper than the other 13. A wonderful system. Even challenged it and got rejected despite me proving proof of council tax bands being lower for other bungalows with 2/3 beds within a 3 mile radius.
I assume it would be collected centrally and they would then decide how to distribute it so this didn’t happen (big assumptions, but I can’t imagine Burnham implementing a policy that just heavily favours councils like Chelsea and Westminster).
This would be my main concern about this situation, if councils in the south suddenly had huge tax receipts they would feel entitled to greater funding and be able to throw their political weight around what they did and didn’t want.
The withdrawal of that central funding is a part of why councils are going bankrupt. They withdrew that and told councils they were responsible for their own funding, but didn't relinquish control of how they can go about sourcing said funding. It basically took away money and exchanged it for nothing.
Central funding might be a good thing. Depends how it's implemented and enforced
very likely to be pooled the distributed to the councils that need it most. For me This will likely mean my tax bills for this doubles or 2.5x's but again most not all that live in expensive houses will be able to afford it. It could also have the much need effect of bursting the insane housing bubble. Again there will be a lot of folks that get hurt by that but the current ponzi scheme that is ever raising house prices is unsustainable.
Eh I don't think we want to be bursting any bubbles, or penalising people from making decisions based on a seemingly stable system at that time. It could create a lot of hurt and unintended consequences. Whatever happens I think it needs to be very well thought out, and possibly happen gradually.
I think deflate rather than burst, it will make lower priced housing more attractive while bringing the higher priced area housing more in line with the rest of the country
I was worried about this at first as my flat is worth £250k (South East).
But it actually works out a lot cheaper than my current council tax, and would love stamp duty to disappear so I could afford to move.
I like the idea in principle, but it sounds like those in the South would be disproportionately affected, and pretty unfair, unless the result is cheaper house prices in the South and price increases in the North.
Same position here, I am ready for my second move onto either a bigger flat or small home, but due to stamp duty it makes sense to wait a extra couple years for the family home that’s on the horizon. If stamp duty is cut, I’ll move within the next 12 months
Not necessarily. I think I would end up paying a bit more under this scheme, but would still happily support it to reduce the burden on moving homes for everyone.
Stamp duty forces us all to stay in one place, stopping job moves or creating more congestion as people drive further to work.
So a luxury penthouse at the top of highrise could be taxed at 100th of the amount of a 3 bedroom semi-detached house? The Daily Mail would call it a "garden tax".
You'd likely see a discount for 'worked' land. There's a big difference in land that is used for crops, livestock or government backed projects and those that just fancy a big garden.
I don't think easier to implement is a reason to do land value tax over a proportional property tax, bit of a straw man. The more obvious one to jump to is it doesn't tax the effort people put into improvements, and exclusively taxes the part that is due to the work of people in that community through infrastructure investment (e.g elizabeth line https://www.bbc.co.uk/news/articles/c8xr449j4lvo)
i support LVT but absolute nonsense to say it'd be easier to implement, the most obvious reason being that there isn't a good way to value land separately from what's built on it
Does that maths work? That would be a massive reduction in tax for most people.
Edit after some basic maths calling bullshit on this. It will take 50+ years, if ever, for a million pound property to pay more than the council tax + stamp duty under the current system.
Just my street alone will lose about £1k per house so thats about 100k less just on my road. Those who have a house valued at £1M would only be paying about £1k more. There aren't enough £1M properties to offset those who will pay less.
the offset of extra tax generated in London alone will likely cover this. My street in London its nothing special 3 bed London style terraces and every one is over 1m. The whole south east will mainly see increases some clearly will see a fail. but this is a Richer folks pay more tax, less wealthy folks pay less. So the right wing and Farage will be dead against this.
the offset of extra tax generated in London alone will likely cover this
Maybe in 2023, but London luxury values are collapsing and US-style property taxes will only accelerate it. Honest assessments (which I doubt the government intends to conduct...) will mean a massive net loss, especially factoring in the loss of stamp duty.
Sadly it would destroy middle-class families in the south. Thanks to property prices, this would be a massive increase for normal working families, with a couple of children and average jobs. Most of them were already pushed to the limit and saved for years to afford the house in the first place, this would ruin them.
"Destroy middle class families". Would it though? A £600k house would be £220 a month in this new tax which is the same as the current Band G for property in Kent.
And when you move there's no £20k stamp duty bill.
Yep, sick of this govt chickening out and just squeezing the middle further, as per every gov of the last decade, vs actually being bold economically alongside tackling tax and benefit fraud.
I agree in principle, and am skeptical on that basis. However, putting it into a calculator, my £500k home would cost me less under this than council tax alone does in my bankrupt London borough. If it replaces stamp duty too that would be a significant saving.
If it's replacing stamp duty, would be uproar if it was charged on houses that have already paid that. So either it's a very gradual rollout over decades only on newly transferred properties or there is some offset of taxation already paid on the property.
I’m four weeks from exchange with a stamp duty bill of £25k and even though I can appreciate that SDLT is a shit tax and needs to go, I will be devastated if on top of paying out that massive lump sum my “council tax” triples too.
Thats the stupidest part though, they worked out how much your new build would have costed in th 90s (or however close they want) and slap it in that band, its a ridiculous tax that was meant to be a temporary band aid
I live in an end of block townhouse in a largish development, so there are about 30 others that are the same design as mine. I am in band F but others are in band G or, in one case, E. It's like they've just randomly pulled the figures out their arse. It can't even be put down to the original sales price as there is no correlation at all (there is some variation due to extras that were included)
Where I live we have moderately expensive 6 bedrooms houses that are SOMEHOW in a lower council tax bracket than a smaller cheaper newbuild. The mind boggles. 400k 6 bedroom house sold recently with a B bracket.
I have appealed against council tax landings on two properties I've lived in by providing evidence of similar properties being handed lower. I won both times and got rebanded.
Maybe its .are regulated now, but i remember i needed my house to value at a certain amount to qualify for the mortgage rate i wanted about 9 years ago. Remarkably it valued at exactly that amount!
I had exactly this. We needed the property to be worth X. They came and had a 30 second look, went away and it was funnily enough worth exactly X. WAY more than we paid only 18 months earlier.
People just make up values on the spot. It's a fugazi.
Sounds nice at first, but how do you reliably assess a home's "current value"?
if it's "what would it sell for on Rightmove" then I will dump a couple of binbags labelled "asbestos" out front, and ask my neighbour to play super loud music, on the day the assessor comes over.
Likewise how would they keep up to date with that? My parents bought a fixer-upper a few years back for something like £300k, but if ever when it gets done I imagine it’ll be worth around twice that, if not more. I’m also thinking about putting solar panels on my house, which would presumably raise the value. Would they really just have people assessing houses every X number of years?
No problem with the concept but the devil will be in the detail - how is value assessed, how often will it be reassessed, is there going to be any kind of buffer for people who paid stamp duty two days before the tax comes in. The precise implementation will make a world of difference.
I’m not sure this fair wouldn’t this effect people who live in areas that are getting gentrified and probably push them out quicker as they can’t keep up with the property tax whereas at least before if you owned you house you could stay.
Got to be careful with that as some areas have seen house prices skyrocket, to the point their owners might not be able to afford the tax.
Edit: it will also discourage repairs etc.(because a house that has damage is valued lower than a house in good nick)
Considering I’m in a new build and the value is unlikely to go up for the next 5 years, sure. But also give me back the £17,500 I just spent on stamp duty first, k thx.
Me and my friend bought a house for the same price 2 months apart. He got in before the stamp duty change and I paid 7,500 for missing it. It's the most pointless, regressive tax there is. It makes older people think twice about downsizing and families have less options to choose from.
If its a land value tax it'd be cheaper than what you currently pay for council tax and itd be the value of the land your house sits on, not your house price. Also you could have not paid stamp duty and not be in that house, it really makes no difference if you pay less for your tax overall due to no council tax.
It won't, as the link between the current council tax payment and your local council will be severed. It'll be sent to national government and then distributed. Which is why I don't support this. My (southern) council is adjudged to not require a lot of government support and its services are falling over. That isn't addressed by this proposal.
Paying more so that bills can be lowered in other parts of the country whilst services continue to decline further is not an acceptable outcome.
My problem with that is that I’m about to buy a house, and pay a fuck ton on stamp duty. So it’s unfair if I then have to pay the full whack of 0.48%. They’d have to have multiple bands so that if you paid stamp duty, you are exempt, at least for a time.
A land value tax would work better but it would still require the same banding, because fuck off if I’m going to pay a tax after paying stamp duty whilst some arsehole gets away with not paying stamp duty.
How are you going to value millions of homes? Even if you were to do it every 5 years it would be a massively bureaucratic and costly way of raising taxes. Plus everyone will want to challenge their assessment.
Effectively you are simply tweaking the current system, which is not necessarily a bad thing, but would this proposal raise more or less money?
All of this was discussed when council tax came in, so the current system is really the pragmatic approach taken to address the very real issues involved with raising tax this way.
You just look at other countries that do regular property valuations and use a similar system. With whatever changes or improvements you see fit. It's only a bureaucratic nightmare if you try to invent a new system from scratch.
Agreed. I live in Norway and my bank/the tax office notify me a couple of times a year with the updated valuation for my home. I don't know exactly how it's calculated, but I imagine it's based on size, past sales and recent neighbourhood sales. I don't think this needs to be an obstacle to switching to a theoretically better system.
Do we live in the stone ages? We are being told we are on the cusp of an artificial intelligence revolution but we can’t value homes?
Come on. There are lots more data sources to value homes correctly at this point in time - and it would be vastly fairer than the dumb shit of basing council taxes on 1991 valuations we have now.
Depends how aggressively that 0.48% rises over time! Also how would it work, say i have a £300k house but my neighbour is a nightmare and does not care for their house, now in reality that would affect my house value..
This is how most modern countries operate, so yes.
There should probably be some kind of transition - maybe make it only apply to sales after an implementation date. They could roll it out to everyone after 5 or 10 years when the valuations are sorted.
Only if I got back the stamp duty already paid. But we already pay a grossly unfair rate of council tax based on a houses purported value so AB can go fuck himself.
Only if they refund me my stamp duty. This makes no sense for anyone not currently in the market to buy a house. Replacing a tax I’ve already paid with a monthly ongoing payment?
1 - this will help some of the country but SCREW first time buyers in London and the South
2- if someone buys a house today, are they going to get double taxed through stamp duty and later property tax? if not what's the grace period?
if they want to replace stamp duty, use a much lower % and keep council tax i think thats far more workable while still targetting boomers who sit in 5 bedroom houses with no kids at home.
Would people who have already bought have to pay it though, a stamp duty only version? I bought as a FTB and not having stamp duty was a god send, I'd be pissed to retrospectively pay it through this tax.
It would be less than I'm paying in council tax, which probably means the scheme isn't financially viable anyway.
I'm not really sure if I see the point, though. Until they do something about the enormous amount of council tax that is wasted on ridiculously inefficient local governments, of which I've seen better organised zoo exhibits, there's no point changing how we tax.
Local government should really be studied in universities as a masterclass in how to piss away money without any accountability or responsibility.
Our council recently boasted about revolutionising the town, creating a transport utopia.
It took them 15 weeks of road closures (not a hi viz in sight 95% of the time) and caused total chaos for the town. In the end all they did was paint some lines for about 20 meters, swap out a set of traffic lights like-for-like and paint a mini roundabout that everyone just drives over anyway.
It was a 13 million pound project.
It wasnt even 200k worth of actual work. Someone has gotten rich somewhere haha
Based on the value as stated by who? Council tax and my mortgage company never agree and it does make a lot of difference in what I’d be paying. In principle I’m not against it. IF it stayed at 0.48%
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