Can pay, will pay, but on the right valuation, please

Council tax bills are due to rise next month, but will still be based on 1991 valuations, often well above current prices. Paul Gosling reports
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Hundreds of thousands of householders in London and the South- east waiting for their council tax bills will be paying too much - because the Government refuses to carry out a revaluation of homes. Council tax liability is based on April 1991 values - and since then house prices have fallen more dramatically in the South-east than in the North.

Not only would many properties now be in a lower band if the valuations were done again, but local authorities in the South-east would receive more government grant, reducing the overall funding burden on householders. While the Labour Party has criticised the current system, it too refuses to pledge itself to undertaking a revaluation or say what alternative to the council tax it would put in place in government.

Council tax levels will rise next month by an average of 6 per cent in England. The highest bills will be paid by owners of homes in Liverpool valued at more than pounds 320,000. Their tax bill will be pounds 2,012.92. The largest increase will be in Wellingborough - where the tax is up by 58 per cent, to pounds 499.50 for an average property - although this reflects the previously very low tax. Several authorities in Scotland and Wales are raising taxes by more than 20 per cent, to pay for the replacement of two-tier councils with new unitary authorities.

But council tax bills are distorted by use of 1991 property values. Figures from Halifax Building Society show that while average property prices in London have dropped by 15 per cent over the last five years, the figure is 9 per cent for the North, while in Scotland they have actually risen on average by 8 per cent. Within these large regions there are much larger variations, with prices falling in London's Docklands by 30 per cent, while increasing in Barnes by 40 per cent. Prices also rose quickly during Northern Ireland's ceasefire, but councils there are funded by the even older rates system, using 1975 prices.

Local authorities admit it is unfair that they have to bill people on the basis of out-of-date figures. Stephen Lord, finance assistant secretary at the Association of District Councils, says: "It is like basing income tax on what you earned five years ago."

The Association of Metropolitan Authorities has asked the Government to carry out a revaluation. "It is completely bonkers that the Government has no plans for a revaluation," argues Martin Pilgrim, finance under secretary at the AMA.

The Department of the Environment says a revaluation will not be carried out for the foreseeable future. The Labour Party argues that the council tax system is unfair, with insufficient bands to reflect variations in property prices. But a spokesman for Frank Dobson, Labour's environment spokesman, said his party was not committed to an early revaluation of properties if it won the general election.

A revaluation would lead to redistribution of government grant to local authorities, paying more to the South-east and less to the North - and this could well involve a shift of funds away from Labour-supporting areas. Without a revaluation the anomalies are likely to grow worse There were almost a million appeals against property valuations when the council tax was introduced three years ago, and all but 3,000 of these have now been decided.

But new appeals can only be lodged if a property has changed hands within the last six months, or where property values have been affected by what is called "a change in material circumstances" to the extent that a property would be placed in a different council tax band. The fall in the housing market since 1991 is not grounds for appeal.

Properties can be revalued upwards if an extension is built, or downwards if an existing extension is demolished. Adaptations for a person with disabilities could cause a property to be revalued in either direction.

A new road, supermarket, factory, housing estate or sewage works near a home are likely to be successful grounds for an appeal. So too might be a permanent change of flightpath from an airport. Subsidence, particularly caused by mining, is another accepted basis for appeal.

Where properties are upwardly revalued this only comes into effect when the home is next sold. Owners are not required to notify the valuation office of changes which increase a property's value, but if asked for details these must, by law, be provided.

Local valuation officers have no obligation to consider appeals lodged now where there is a belated recognition of a past error rather than a change of circumstance.

In practice, however, they will do so, backdating them where the application is accepted. This is likely to lead to the local authority issuing a rebate, plus interest on the sum. There is a right of appeal, to a valuation tribunal, against a valuation officer's decision in the event of a change in circumstances, but not where a factor was previously ignored.

In one recent case in Boston, Lincolnshire, local surveyor Thomas Balderstone acted on behalf of a bungalow owner who had overlooked a clause in the deeds of the property which restricted its use to local farm labourers. The valuation officer has now revalued the property at two-thirds of full market value.

While many homeowners use surveyors, estate agents or solicitors to represent them in requesting a revaluation, this is not necessary. Indeed, many surveyors decline to take on the cases. Mike Cowley, a surveyor based in Nuneaton, Warwickshire, said: "My advice is for people to have a go themselves. If we were to charge them a reasonable fee it would not be worth it, as it would not save them any money."

Citizens' Advice Bureaux will assist people to prepare revaluation applications, and addresses of local valuation officers can be found in the telephone directory.

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