Treasury Committee - MPs question accuracy of VOA property valuations

Council tax bands are based on the 1991 value of property in England, and business rates for the next three years will be based on the value of business property on 1 April 2021.

Witnesses in this session included Jonathan Russell CB, VOA Chief Executive, and Alan Colston, VOA Chief Valuer and Head of Surveying Profession.

Andrea Leadsom (Con) criticised VOA’s valuations, saying her constituents feel that “VOA valuations are unfair” and provided an example that some retirement home settings have been given a high council tax banding only because a restaurant or hairdresser exists within their facilities. In response, Alan Colston responded that VOA valuations are as correct “as they can be at the point in time” that they are conducted.

Leadsom, not convinced by Colston’s answer, asked how VOA valuations could be trusted when a £30 million house in Westminster is paying nearly the same council tax as a property in County Durham which is valued at £130,000. Colston replied that he doesn’t believe that this is to do with valuation – council tax has a banded system, the VOA does not set the bands and councils are responsible for the charges and the recovery of the bills.

Leadsom asked how often the VOA provides feedback to policymakers and questioned why the VOA still uses valuations from 1991 for council tax whilst in Wales they are using those from 2003.

VOA’s Jonathan Russell said he could not answer for departments whose job it is to determine questions like this. He noted that VOA had met only yesterday with HMT and DLUHC officials in relation to the Non-Domestic Rating Review (NDRR) regulations.

John Baron (Con) asked about plans for VOA modernisation, particularly when it comes to business rates, highlighting that HMRC “does not have a good track record when it comes to ICT systems and delivering them”. Russell responded that the VOA is making sure that people who are creating the new system are those who are using it, saying that the new system “will deliver what we want it to deliver, rather than something that may only be theoretically appropriate”.

Baron then moved on to his next question regarding VOA efforts to minimise bureaucracy following HMRC’s recent consultation about the government’s planned new duty on ratepayers, asking them to provide specific information to the VOA. Russell said digitalisation of business rates is HMRC’s policy issue, however they are working closely with HMRC to make sure all is connected by “linking a business’s tax history and tax profile with the property”.

Rushanara Ali (Lab) wondered how the VOA has implemented changes in relation to the government’s policy to move the revaluations cycle to a three year cycle (from six year). Russell stated that they have started the revaluation for 2026 and are in the process of gathering information.

Ali, highlighting the committee’s 2019 report into business rates, asked if the VOA is confident that the current round of valuations will be consistent across businesses. Russell replied that the VOA is working in partnership with ratepayers and agents and in a lot of cases look to “either use a pre-approved method of valuation or pre-approve the valuation”. The VOA is confident that their valuations are going to be accurate, he added.

Ali was interested to know how the VOA is ensuring that their valuations reflect the current economic circumstances that businesses are facing. “We go out and collect a lot of data, and we make sure that the antecedent valuation date is consistent across the whole of the business geography”, Russell replied.

Emma Hardy (Lab) requested more information about the “six-month rule valuation challenge”, mentioning that someone that has just moved into a new house may not be aware of the rateable value of their house. Russell explained that individuals have six months to “lodge a formal appeal”, however VOA are happy to still look into the issue after six months.

Hardy thanked Russell for the information provided and suggested that VOA should clarify this issue further on their website. She then asked whether flooding and climate change impact VOA’s valuation of properties. Russell said VOA follow the market. Colston added that VOA is basing their council tax values on 1 April 1991, and therefore “it is the extent to which the market would have reflected that you were in a flood zone as of that time”.

Hardy expressed concern that the VOA still uses old data, noting that the flood risk in 1991 is different from the current flood risk. She asked “how the market is going to react to homes that are prone to flooding”, to which Colston answered that, if a property is flooded, VOA can take action. For example, if it is uninhabitable, they will remove it from their list. “We do not have a lot of discretion in terms of updating [the 1991] values without a policy change” he explained.

Anne Marie Morris (Con) sought some information in relation to VOA valuations post-pandemic, and Russell noted that they have published guidance on their website so people can understand what VOA is doing, insisting that VOA is “transparent”. Moreover, Colston said that the industry has agreed to use the most recent trading year without the pandemic, with a 20 per cent allowance given for the presence of Covid as of April 2021.

Getting closer to the end of the session, MPs, in particular Leadsom and Harriett Baldwin (Con), the Chair, cast doubts upon VOA’s statement that they do not ‘do policy’, saying that they do not understand how VOA can “make special adjustments for pubs” and then mention that they are not able to make any policy changes across other sectors. Russell acknowledged “we do influence how we do the valuations, because we are doing the valuations”. This might be considered technical policy rather than legislative policy, he suggested.

You can read the full transcript of the session here.