The upcoming council tax revaluation in England will lead to large increases in council tax bills unless the tax bands are readjusted in line with house price inflation says the Royal Institute of Chartered Surveyors.

Revaluation has already taken place in Wales and RICS ICS work shows how re-banding was not carried out in line with Welsh house price inflation - house prices have risen an average 129% in Wales since 1991. This has resulted in more homes automatically entering higher bands and costing Welsh council tax payers £140 million over and above local council tax rate rises.

This cuts across assurances that the total revenue collected from council tax in Wales would not change because of the revaluation and re-banding. If the same model is adopted in England, average council tax bills (and revenues) will creep up when the revaluation kicks in in 2007.

Welsh council tax revenues are set to rise by around 10% in 2005/6. Of this increase, 4% is accounted for by bill increases in each band to fund local services (the lowest increase in council tax since its introduction) but 6% is due to the impact of more houses moving into higher bands.

RICS Economist David Stubbs, said:

“It has been publicly stated that Council Tax revaluation is a revenue neutral exercise. Its not about increasing the overall tax take. If the Welsh model is adopted in England we will see a disproportionate number of houses moving up into higher bands in Southern regions where house prices have risen above the national average since 1991.”

“Since the last revaluation in 1991 house prices in England have risen by an average 162%. To remain tax neutral any re-banding exercise must take account of this.”

Links: RICS Website

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