Valuing/re-valuing your new build for Council Tax purposes

[Bancroft]

All this Burnham talk about a 0.48% property tax has got me thinking about how much we're going to end up paying in council tax (or property tax...) at the end of the process.

At the moment we live in what can only be described as a slightly posh shed (it has plasterboard on the inside - mainly - but doesn't have heating or insulation) so our council tax is minimal.

 

Once the new house - on the same plot - is finished, we will be knocking the shed down and will move to the new one.  And I expect the council will want their pound of flesh.

 

What are other people's experiences of the council valuing their new house/replacement house?  How have they gone about creating a value for it?  Did the process seem logical or was it as obscure, overly bureaucratic, and nonsensical as the planning process that started the whole affair?

[Gone West]

48 minutes ago, Bancroft said:

What are other people's experiences of the council valuing their new house/replacement house?

We were in a very similar situation to you. In our case I think the District Council suggested a banding to the Valuation Office. We disagreed with the valuation and suggested a band two lower than they wanted. We ended up at the band halfway between the two.

[marmic]

interesting - we'll have this soon.   hopefully they aren't like their planning office!  keeping fingers crossed they'll just do it on paper based on m2 and number of bedrooms???

[Russell griffiths]

We had the local council tax lady round she suggested a band we are happy with, a month later the valuation office have moved us up a band, we are currently disputing this with the valuation office. 
we pay for too much as it is. 

[Bancroft]

Whatever happens, I think his comments have opened up the issue of how people pay for property.  Homes in the UK haven't been re-valued sine 1991 and the top band is houses worth £320k and over.  That wouldn't buy you much anywhere now.

 

The two main options seem to be:

 

Re-value everything and continue to use the existing system - perhaps increase the bands above Band H (eg, I, J, K...etc) to deal with the increased values, or

Move to a Burnham style system.

 

Both have their pros and cons.

 

Sensibly, we should have kept re-valuing on a regular basis (some EU countries revalue annually, others every 2-3 years).  That would be logical, might have kept a lid on soaring house prices, and would avoid the cliff-edge we might be facing soon.

 

The danger of Burnham's system is the average property will probably double in 'value' overnight as it is revalued to 2026 from 1991, but the 0.48% will still be in play.  Yes, your property goes up in value but it is an unrealised gain because you only realise the gain when you sell.  So, someone paying, say £1500/year for a house they bought under the old council tax system could suddenly find themselves facing a property tax bill of £3000-£4000.  How is that going to benefit the economy?  And what happens when they can't pay?  take their house off them?  Put a lien on the property?

 

Laws of unintended consequences...

[Alan Ambrose]

I believe one consequence of the current UK system is that new houses pay far more than old houses, regardless of market property value or floorspace. So, some consistency would be helpful & fair.

 

I think property taxes in the US are far, far higher than the UK. Depending on state, they are often based on market value.

 

This encourages people to down size as they get older, but some people are forced to sell if their area becomes more popular, house prices move up, and the owners can’t afford the increased taxes.

[marmic]

"Viva la revolución"

[LSB]

Our current council tax is band C because the house was a small farmers cottage when we purchased in 2000.

That said we are rural so have zero facilities offered to townies

 

But, we are converting a barn on the same site which will probably be worth less than the host house in selling value but it's unlikely to be in the same CT band.

 

Does anyone know, do houses get revalued when they are sold.

[marmic]

10 minutes ago, LSB said:

Does anyone know, do houses get revalued when they are sold.

not as far as i know - until those in power change things

[kandgmitchell]

The Council doesn't set the Band, it's the Valuation Office, an agency of the HMRC. The Council decides when Council Tax is due to start and they set you off on what they think it could be. They then re-adjust once the VO confirm the Band. They stuck us in E which compared to the large detached "executive" houses along the lane in the sane Band seemed unfair so we took it up with them. They sent us a basic form asking for details of the property but stuck to their guns saying the Band width of £88K-£120K based on 1991 values was sufficiently wide to include us near the bottom and the posh houses near the top.

[Gone West]

1 hour ago, LSB said:

Does anyone know, do houses get revalued when they are sold.

Yes, we've moved house several times and most times the band had gone up one step. The Council recommends a band to the Valuation Office, who generally accept it in my experience. We have challenged these increases with the Valuation Office and been successful. The Valuation Office have backed down when the appeal hearing date is close.

[marmic]

1 hour ago, Gone West said:

The Valuation Office have backed down when the appeal hearing date is close.

[ToughButterCup]

2 hours ago, Gone West said:

.... The Valuation Office have backed down when the appeal hearing date is close.

 

"Freedom Citizens, Freedom. Come the revolution we will remember..."

 

 

[JohnMo]

Ours ended up the second highest band -3 bed bungalow. Trouble is our views add to the selling price of the house and house is geared to fully take advantage of the views.

 

Good job we have our own water and sewage as would have just over £1k to the council tax bill 

[Bancroft]

23 hours ago, Alan Ambrose said:

new houses pay far more than old houses

Bizarrely, new houses are valued by calculating what they would have sold for on 1 April 1991 and then put into the appropriate band. That's because there has been no overall re-valuation process since that date.

 

23 hours ago, Alan Ambrose said:

people are forced to sell if their area becomes more popular, house prices move up, and the owners can’t afford the increased taxes.

This is one of the issues with a property tax of this sort - any gains in property value are unrealised until you sell but, in the meantime, your taxes keep going up.

 

And if anyone things the government will ever down-value properties you're living on the wrong planet!