To think an annual property tax is incredibly unfair?

[Itchthescratch]

I come from an area with low house prices. It is great! My friends can generally afford houses even with lower salaries as the earnings:house prices ratio is better. Rents are also lower so they have proportionately more disposable income.

I have moved to a more expensive area where house prices are higher and people have really had to push themselves to buy a property. Salaries are higher but not high enough to make up the difference. They have had to pay more stamp duty , pay more interest and have less disposable income each month.

I am really struggling to understand why my friends in the South should also automatically be paying more property tax under the new proposals being suggested by Burnham supporters? What is the justification? They would love to buy a large detached house for £300k like my friends from home but this isn't possible. It feels like they are being double penalised.

Just to add house prices haven't risen in real terms in the area in live in now for 20 years so the value of my friend's houses is simply money they have paid in.

Yes, it's hard to see how people's gripes about Council Tax bandings being unfair from neighbour to neighbour would be easily resolved using the new system unless it was a LVT. Realistically they will never be able to accurately value each individual house, especially for houses that are on roads and in areas where each house is unique.

We also all know that how you maintain and decorate your home can make a huge difference to value. A property developer down my road bought a house, made no structural changes but modernised the whole building and managed to sell a year late for £300k more. So how would you feel if you knew your neighbour had done all that work and was sitting on a more valuable asset than you but was paying the same? Conversely what if your house was found to have subsidence and you found out you had been overpaying for decades because actually your property was always worth hundreds of thousands of pounds less than you though. Where is the rebate?

Houses don't have any particular value until they're sold. How do you know that your house won't sell for over the estimate or will need at huge reduction to sell? Yet you will be forced to pay a tax on some arbitrary value someone has placed on the home. It's bonkers.

I’ve just done the maths and 0.48% of the value of my flat in zone 3 in London works out to exactly the same (to the pound!) as what I pay in council tax with the single person discount.

Other countries have residential property taxes, how do they do it?

I suspect that it may be self assessed based on market value within bands, with severe penalties for false valuations based on targeted audits. HMRC will know from their vast sources of data what properties are selling for within certain bands in different areas, so if you are selected for an audit and found to have undervalued deliberately, you will pay dearly.

Self assessment means there will not have to be armies of valuers trekking the land to value each and every property. It has massive administrative advantages, and if the penalties for undervaluation are severe enough, it is carrot and stick. It works for non PAYE income tax doesn't it?

I'm not saying that WILL be the case, just what I think might work with the least admin cost, which is eventually paid by us anyway.

100% agree. Instead of being a country of inventors and innovators, we now seem to excel at negotiating poor value public-private contracts, killing growth and aspiration, legitimising waste and using the politics of envy to justify inefficient / punituve policies.

It beggars belief that, in a system that depends on taxpayers, council housing could end up providing more security than owning your own home. All whilst vilifying the very people whose taxes help fund the system and the support that others depend on.

Sensible commentary from the Times:
https://www.thetimes.com/money/tax/article/andy-burnham-council-tax-changes-comment-ben-wilkinson-5gxts8x3h

I don't know about elsewhere, but in the U.S., valuations are not self-assessed. Each municipality has an elected tax assessor. The process varies a bit from place to place, but a market value is estimated based on size, location, property characteristics, etc., and that forms the basis for your tax.

You can challenge your assessed value, and many people do. If you (or your agent) can't come to an agreed figure with the assessor, a judge decides. We've gotten our property taxes reduced that way three times in the last 20 years.

itep.org/how-do-real-property-taxes-work/

@MissConductUS That's interesting, and good that it's open to appeal also. I do know that in Ireland their Local Property Tax is self assessed. The authorities (HMRC equivalent) suggest a band presumably from their vast data sources, and the owner can choose to accept that, or select their own valuation band. I presume if a person's selected band is outside the norm for the general area band, questions will be asked pronto! And I'd imagine it's rare that an owner would return a higher band!

Do you have a share token?

It is unlikely to be self assessed. The incoming mansion tax will be based on the valuations from the Valuations Office. It's unlikely they will deviate from this.

From gov.uk:

The current Council Tax system was introduced in 1993. It taxes domestic property through eight valuation bands, based on property values in 1991. Local authorities set annual Council Tax levels and administer the tax, with support and exemptions available. In 2024-25, Council Tax raised £40.3 billion across England.
The High Value Council Tax Surcharge (HVCTS) is a new charge on owners of residential property in England worth £2 million or more in 2026, taking effect in April 2028. A public consultation on details relating to the surcharge will be held in early 2026.
Homeowners, rather than occupiers, will be liable to the surcharge and will continue to pay their existing Council Tax alongside the surcharge. Social housing will not be in scope.
The Valuation Office will conduct a targeted valuation exercise to identify properties above £2 million and therefore in scope. Fewer than 1% of properties in England are expected to be above the £2 million threshold. Revaluations will be conducted every five years.

I don’t know why everyone thinks properties will be so hard to assess? They already are for council tax. Not that it doesn’t have its problems but it’s not a new system. I imagine it’ll be that in terms of actual property+ regional /street value and then open to challenge .

I mean Zoopla valued ours exactly the same as 2 out of 3 estate agents did so it’s all there. It’s not going to be some bloke with a clipboard assessing every single house. The data already exists.

Firstly properties aren't currently assessed to this degree of supposed accuracy as they are put into quite broad bands and taxed accordingly. It's not currently worked out as a percentage of a supposed exact value. This is far harder to do.

Secondly lots of houses haven't actually been reassessed for a long time for Council Tax purposes. This is where a lot of the gripes from this thread come from. An accurate valuation of all properties and allowing all appeals is estimated to cost between £300-£500 million. Remember that the proposed changes will actually be relatively tax neutral so who picks up the costs associated with this assessment process? This could easily end up costing the state an awful lot of money that it doesn't have and taking a lot of time to end up in a situation where you just have different winners and losers depending on what region of the UK you live in.

The fact it's taking the valuation office 2 years to value less than 1% if the country's houses should be a warning to Burnham. He only has three years left before he potentially loses power and this policy could be changed before it's actually implemented leaving us all with a massive bill.

Also Zoopla consistently overestimated the prices on our street by an awful lot. The lasts house that sold was overvalued by £400k!

I have no doubt it will be designed to capture as much uplift as possible. Grouping new builds with older properties in the same area will push up the “average value".

I agree completely. This will inevitably lead to a lot of challenges though which will mean the system becomes overwhelmed and everything will be delayed even further. I can already tell that most of my street will appeal if they use anything like Zoopla. Where are all the people to go through each individual claim and assess its merits? It's going to take forever and in the meantime the government is likely to change. I see a Burnham has ruled out an election but he really doesn't have the time or the mandate to start making these kinds of onerous changes to the tax system.

No I don’t think it’s fair at all. In so many ways, the elderly person whose lived in the same house in the south east all they’re life and are just managing to make ends meet, but don’t want to move, and may be forced to sell.

my semi in the southeast cost me more than the same in the north, I’ll have to pay more inheritance tax when I die due to the value of my house, more care costs, paid more stamp duty etc.

tax should be fair and equitable, and this isn’t.

Even if the cost of assessment is £500M in the first instance, that is nothing in terms of one year’s revenue, north of £50B. Ie, from the figures given for assessment costs and revenue, the start up costs for assessment will be less than 1% of one year’s revenue.

Costs will then go down as assessments become embedded. Few LVT or property tax assessments are conducted annually.

But the point is that the proposal is tax neutral. So you have spent £500 million and raised no extra money. This is the same amount that we currently spend on UK migration enforcement for context. An issue that is often listed as a key concern for lots of voters.

We have no idea about how reassessment could work. We know from America for example that administrative costs often remain high and states like Texas have an enormous amount of costly disputes. LVT would be easier than property value but both have issues for an exercise that ultimately will almost certainly lead to a net decrease in overall tax receipts once costs are accounted for.

The nonexistent proposal may be better than tax neutral because of the extra land being brought into taxation. Again, we must reserve judgment until a proposal exists.

PS and there is absolutely no ‘almost certainly’ about declining tax revenue, either.

PPS the real problem with Texas is that Texas has a lot of right wing people it is difficult to characterise politely. The state already has no state income tax. The governor, Greg Abbott, has made it clear that he would like to do away with property taxes as well.

How, one asks, would local services and schools be funded? In a nutshell, the Texas Republican party is trying to starve them.

In 2023 Texas passed a state law nullifying city laws passed by Austin, Dallas and other reasonable cities requiring hydration breaks for workers in scorchingly hot weather. Gov Abbott supported this bill. Now the only worker protections around extreme heat are Federal. Enforcing these is extremely unwieldy and time consuming. Basically, people need to die first.

The Republican candidate for the US Senate seat in Texas is Ken Paxton, the former state Attorney General. He was impeached by his Republican colleagues in the state legislature and indicted on three counts of fraud. (He cut some kind of deal and the charges were later dropped.)

Naturally Texans own the most guns in America.

This is the backdrop for your statement about the heat around property taxes in Texas. People in Texas hate taxes of all kinds, they are Trump’s biggest fans, they are fine with their neighbours starving, other peoples’ DC having poor schools, workers dying of thirst, corrupt politicians. Of course they will dispute property taxes at the drop of a hat.

These statements do not apply to all Texans. Some wonderful people live in Texas.

You raise an interesting point. Why do single people get a discount on council tax? I’m not arguing whether they should or not, just the rationale behind it. And, single people get that discount irrespective of how big the property is I think? A quick google suggests that it is to do with occupancy…..which seems fair to me. More people use more services? But it does not seem that this will feature in any new tax? And what about if you are a single person, living in a large home in an expensive area? Will they get a discount too? A lot to think about!

If it's designed to be tax neutral in terms of revenue raised and has high administrative costs then it will lead to a net loss in tax. Yes, lots of ifs and buts. If he essentially increases taxes so that the administrative costs can be covered then I'm sure this would cause absolute outrage.

It will cause delight, not outrage, overall if the large majority of personal tax bills are the same or less and the increase comes from bringing the land builders are sitting on into taxation.

Motivate the builders to ….. build.

Besides, in no world is a start up admin fee of less than 1% considered high.

This explains why it would cause delight, not outrage.

https://www.adamsmith.org/blog/the-terrors-of-british-land-ownership

But it's ok to have council tax based on bandings on a property's value from 30+ years ago?

This isn't a start up fee. It's a fee to rearrange the deckchairs on the Titanic. This will not increase tax revenue. The majority of the population may be better off but the sizeable minority footing the bill for this aren't necessarily wealthier or better placed to afford the higher taxes than the people with reduced bills. They then find out that a decent chunk of the money they're paying is to administrate over a system that forces them to subsidise others and you can see how it can become a political hot potato. £500 million spent to raise no additional tax doesn't look good when we are claiming there is no money for life saving cancer treatment.

If this tax isn't a LVT but focussed in property values then there is every chance that builder's land will remain exempt or be charged at a very low level.

Look at the poll and you will see that the general consensus is that people don't support this tax. It hardly speaks of the delight you seem convinced about.