To wonder why council tax in my area is £100s more expensive than many areas of London?

[Bookaboo]

Our council tax has increased yet again, and I happened upon this article in yesterday’s Guardian about the massive difference in council tax bills across the country.
www.theguardian.com/money/2018/mar/03/council-tax-unfair-westminster

If council tax is based on property value, why does my average 3 bed semi in the North East cost almost double that of an 8 bedroom mansion in Westminster?

Makes no sense whatsoever!

www.theguardian.com/money/2018/mar/03/council-tax-unfair-westminster

Council tax is a really complex one! My understanding is that it's based on property prices in 1991(?). A Band A property was anything up to £40,000 (my then house was in Band A - I live in the NE too), and although it would now be worth about £70k, it's still in Band A. Band H was the top band, for properties over £320,000 - I guess there weren't too many of these in 1991!!

To answer your question, maybe the amount of money a council needs depends on how densely populated a region is? So a council with lots of people living in it needs more money to provide more services? Perhaps Westminster isn't as densely populated as the area you live, so they don't need as much money?

And if house prices are generally low in a particular area, and, say, most houses are in Band C or below, they'll need to charge everybody who lives there a much higher charge than somebody in the same band in Westminster, as there aren't many higher priced properties to 'subsidise' the people living in lower priced properties.

I realise I could be talking utter bollocks, but those are my thoughts .

I don't know rent and mortgages in London are ludicrously expensive compared to many parts of the country I live in the North West the average rent is about £400/month for a two bed house , maybe councils think people can't afford high council tax

It depends on how much the local authority needs to spend. Perversely this means that in lower income areas with lots of elderly and unwell people, with lots of people on benefits, you pay significantly more even though your home might not be worth as much as those in a more affluent area.

The richer the area, the fewer people need the council's help. Therefore their costs are lower, and their council tax bills can be lower.

Not "fair" but that's the way of the world.

www.moneysavingexpert.com/reclaim/council-tax-bands-change

Not sure if helps but may explain

Many of the services in Westminster that are funded by council tax are actually paid privately by families - there's a huge amount of people who live in westminster Monday-Thursday only thus don't create as much rubbish. Social care etc. is mostly paid privately. There's also very little social housing in comparison to most areas. Most families don't have children, and most children who need support are again in a position where there parents can access it privately. Parks are maintained by Royal Parks Foundation, and green spaces are often shared and maintained by residents through their annual leaseholder fees.

I live in another area of London where people are anti recycling - our council tax is high because the council continually have to sort out people's laziness on this front. Massive bug bear of mine.

Not sure if it’s still true but when Tony Blair stopped being PM and moved to a £7million house in London according to the news he was paying less council tax than I was paying on my 150k 3 bed semi up north.

And I am pretty sure council tax bands are based on the last sale price of the house - not the price in 1991.

Depends on so many things!

Council tax base (how many properties are in your area)
Level of Revenue Support Grant given by central govt.
How much other income the Council can generate from investments and assets.
Type and level of services provided
Whether you live a unitary or 2 tier area.
Rural services are more expensive to deliver.
Demographics - is the population likely to be less reliant on council services?

But with London authorities, there hasn’t been a revaluation on properties since 1991 so some property values are way out of kilter for the banding.

Nope, ours is based on the value of the house as it would have been in 1991 and I'm pretty sure this is common (note that ours is a new-build so although our house is worth £245,000 , we are in the £80,000-£100,000 bracket because it's based off values in 1991)

Your band can change if you get significant alterations (for example, if you added a big extension and added two bedrooms) but only when it comes to be sold. But it doesn't change based on what people paid for it.

Doesn't it also depend on how much your council is collecting? E.g. I read once that in Manchester, the council only collected 23% of possible tax because of the very high number of student dwellings and some people on benefits who didn't pay council tax. Whereas Westminster or RBKC get a much higher rate of payment.

Thanks for clarifying that @Celebelly Everyone ignore my post about the last sale price dictating the council tax band!

It's a really weird and confusing system and horribly outdated.

To answer your question, maybe the amount of money a council needs depends on how densely populated a region is? So a council with lots of people living in it needs more money to provide more services? Perhaps Westminster isn't as densely populated as the area you live, so they don't need as much money?

Actually, it's the opposite. It's more expensive to deliver services in a sparsely populated area. In a rural area, there are a lot more miles of roads to be maintained, more libraries, more schools (although the schools will be generally smaller), more fire stations, the council will need more dustmen to get all the rubbish collected because of the distances they have to travel and so on.

The London borough where I used to live had 7 libraries. The county where I now live had 30, for a similar number of people (they have had to shut several to make savings). And they had a mobile library service to serve isolated villages. Every year, the council has to cut hedges on all the rural roads, not something that happens much in an urban area.

"Sparsity" is one element in the complex formula used by central government to allocate funds to local authorities through the revenue support grant.

This is reflected in our council tax, which has been in the top 10 most expensive in England and Wales for 20 years or more and was the most expensive for several of those years. We have a band C property, and this year, our council tax was over £2,000. From April, it is going up by another £120 or so.

To add insult to injury, the project I work on is funded by the county council. They are slashing our funding by 50%, so I may well be made redundant. It's going to be bloody hard to find that money out of one income!

That article is a pile of nasty shite. It assumes people who live in expensive houses are cash rich. In reality, in London loads of perfectly ordinary people in London bought normal houses in the 70s and 80s which have now had their values artificially inflated way beyond their true values. Many of these people are now pensioners on low incomes who want to continue to live in their own homes. If their houses were readjusted to reflect their artificially inflated values, these people who are on relatively low incomes wouldn’t be able to afford to live there anymore.

But that would of course suit Guardian writers who would love to punish uppity working class people who had the temerity to try and better themselves by buying their own properties and trying to leave an estate for their children.

What most of the private school educated Guatdian staff want is that expensive housing should be the preserve of cash rich people (basically them and their families) and they’d like to force non-cash rich people out of the housing that has had it’s value artificially inflated by Guardianistas and their ilk in the South East.

And of course, as normal, Guardianistas will do this under the incredibly thin veneer of pretending it’s out of concern for poor people.

It’s not.

Spot on Chelledawg.

As well as living in a (relatively) sparsely populated rural county, the population here has a higher proportion of the very elderly and a higher proportion of school-age children than the national average. It also has pockets of extreme deprivation. It is one of the few English counties with no motorways, so almost all the roads are maintained* by the council and not by central government.

The whole system is really flawed. I worked in local government for a few years in the 1970s, and then again from the mid-80s to 2000. The need for reform of local government finance has been a constant talking point, and each "reform" seems to have made things worse. Every now and then, there'll be a change of government and the formula gets "tweaked" by the incoming government to favour areas that support the party now in power.

*I use the word "maintained" loosely, as there is precious little evidence of any maintenance. You can tell when you cross the county boundary because the road surface immediately improves.

To answer your question, maybe the amount of money a council needs depends on how densely populated a region is?

That wouldn’t make sense, this area is densely populated.

Demographics - is the population likely to be less reliant on council services?

And if they are, why should it be people living in the same area that take the burden?

If their houses were readjusted to reflect their artificially inflated values, these people who are on relatively low incomes wouldn’t be able to afford to live there anymore.

Just another reason why the council tax system doesn’t make any sense!
In any case if they were readjusted, it would probably just bring them into line with other areas, because they are already paying less.

And I am pretty sure council tax bands are based on the last sale price of the house - not the price in 1991

No, it's 1991. Everyone with any knowledge of how the system works knows that a property re-evaluation is overdue to the point of urgency, but no government wants to be the one that moves loads of properties from band A to band I.

The differences between adjacent bands aren't actually that massive. Band D properties are used as the datum. In theory, the council works out how much money it needs to raise and applies a formula that takes into consideration the number of properties in each band, and calculates what the band D rate needs to be to bring in that amount of money. Then a percentage is added to the band D rate each of the higher bands, and deducted from it for each of the lower bands.

*It depends on how much the local authority needs to spend. Perversely this means that in lower income areas with lots of elderly and unwell people, with lots of people on benefits, you pay significantly more even though your home might not be worth as much as those in a more affluent area.

The richer the area, the fewer people need the council's help. Therefore their costs are lower, and their council tax bills can be lower.

Not "fair" but that's the way of the world.*

It’s not just a matter of it being unfair, it’s not right! As you say it’s a perverse way to obtain the funds to support those services. These things should be funded through national taxation and central government.

Well, Elton, here's an article from the Tory-loving Telegraph that you may find more agreeable. A couple of the details, eg the council tax levied on empty properties, may be a little out of date.

www.telegraph.co.uk/finance/personalfinance/tax/12062498/Mapped-do-you-live-in-a-high-council-tax-area.html

For many years, the Tory's flagship borough of Wandsworth got so much in government grant, they didn't charge any council tax at all.

why should it be people living in the same area that take the burden?

Because you voted them in? Part of our reason for moving out of the Labour-controlled city was the cheaper rates in the Conservative countryside.

It’s not just a matter of it being unfair, it’s not right! As you say it’s a perverse way to obtain the funds to support those services. These things should be funded through national taxation and central government

I kind of agree with you *Bookaboo", but I fear that those who manage to avoid paying income tax/corporation tax etc would gain from that. The big advantage to a property-based tax is that houses tend to stay where they are and the rules are pretty cut and dried: you live in it, you pay, unless you're in one of the exempt categories.

That's a load of political bollocks, Elton

Everyone, Guardian or Telegraph reader, who has a £ 1 million property should be paying their fair share of council tax
They have wealth; they just chose to tie it up in property instead of stocks & shares.
Why should the struggling generation rent, who missed out on the property windfalls, subsidise people living in £1 million houses

It is income tax that penalises people who don't come from wealthy families
whereas taxes on wealth, like council tax, are fairer especially to younger people.

I just had a look for my area, the highest band is for properties worth more than £320,001.

I'm in NW London and just had a look on rightmove. In the entire Borough (which has about 360,000 people in it) there are only 7 properties for sale under that amount that are not flats, and all of them are 1 or 2 bed houses.

So if you redo it based on property prices then that means pretty much everyone in this very densely populated, very mixed in terms of affluence, borough, becomes a top tier council tax payer.

We have already had our council ship loads of people out of the borough when the changes to housing benefit came it, I hate it, turfing people out away from schools, families, jobs and all the rest of it. London is massive it should NOT be a ghetto for teh rich, the govt needs to take action on investors from overseas buying up tracts in central london which has this catastropic rippling effect pushing out through all of london and into further away places now too. it is terrible for communities.

Also, there are so many of us here, it's very densely populated, so things are cheaper as done en masse over a small area.

The councils set their own rates, don't they? I don't know much about it, but to put everyone (including people who are poor) into top tier bosh done, is like the poll tax all over again, just saying everyone in london has to pay top whack. I don't like it, and not just because I live here, I think it's an unfair solution.