BPF calls for Council Tax reboot to fund more affordable homes

7 Aug 2014

Policy area: Residential, Tax & Finance

The British Property Federation (BPF) is urging all political parties to commit to a full revaluation of council tax in their election manifestos in light of research which shows that the council tax system needs to be restored to fairness – an exercise that is not as scary as politicians might think.   

The BPF suggests that additional income generated by reform be spent on affordable housing in or near to the areas in which it was raised. This would help areas of the UK, London in particular, to meet affordable housing requirements and maintain a level of diversity that a Mansion Tax would not achieve. 

Independent figures based on a hypothetical revaluation in 2012 show that although council tax revaluation would lead to some net gainers and losers, 70% of households would see a negligible change to their bill. 

The report shows that there would be 17.3% net gainers in the North compared to 22.9% net losers in the South. In London, which has seen the most significant increases in house prices over the past 23 years, about half of residents would see bills remain broadly the same, a further quarter of Londoners will see their bill rise by £25-50, and only four per cent will see an increase in their bills of over 50%. 

As the figures show that a full revaluation would not lead to large amounts of the population being out of pocket, the BPF is urging governments not to shy away from undertaking it. A revaluation was meant to take place in 2007, but was postponed in 2005, whilst the Government of that day looked more broadly at local government finance reform.

Liz Peace, Chief Executive of the British Property Federation, said: “Property taxes require regular revaluation to maintain fairness and economic efficiency and council tax has not been updated since 1991. Politicians, through their continual postponement of a council tax revaluation, are bringing the credibility of council tax into disrepute. If you are going to have a tax based on property values then you have got to have revaluations more than every 23 years.”

“A revaluation, coupled with extra bands on council tax, would be accepted by those who are better off and see that council tax equivalents in comparable cities like New York are far greater than they are in the UK. By ploughing the additional revenue created by the tax back into the provision of affordable homes, high value areas can benefit from the diversity of homes that creates a thriving community. 

“It is also worth nothing that the advancement in technology since the early 90s has been significant, and that a revaluation should not be seen as an expensive or insurmountable administrative obstacle.”