Identifying homes and businesses not paying rates or council tax

Collectively business rates and council tax revenue in England and Wales accounted for approximately £57.6 billion in 2018-19. This was split across roughly 25.8 million homes and 2 million commercial premises. These figures are obviously based solely on collections made from properties that are listed on both the council tax banding list and rating list as compiled by the Valuation Office. However it has been well documented that a significant number of properties both domestic and non-domestic are missing from these lists for a variety of different reasons.

The potential value of missing assessments and properties
Even if we conservatively estimated that as small a percentage as an additional 0.1% of properties remain unlisted this still equates to £57.6 million which Local Authorities in England and Wales could be potentially missing out on in revenue collections.

Dataset and list matching
Following a recent technology development, for the first time ever Local Authorities are now able to quickly identify both council tax properties and non-domestic properties which do not appear on either the banding list or rating list. The NEXUS solution works by drawing from a variety of datasets including online property listings and directories and cross referencing this data against the current rating list and council tax banding list to identify discrepancies.

Incorporating unique inbuilt mapping software Local Authorities can filter down and zoom into specific postcodes and areas to identify the location of potential matches where a property may appear to exist on one or more datasets but not appear on either the rating list or council tax banding list. This indicates a potential match on a missing property or assessment that a Local Authority will need to review.

Missing assessments and properties dating back more than 20 years
Initial research identified using NEXUS suggests that properties built and developed dating as far back as the 1990’s have not been included on either the council tax banding list or the rating list. In the past Local Authorities were responsible for notifying the Valuation Office of any new developments and the data flow between planning and building control departments was not quite as sophisticated as it is today which may account for some of these omissions.

Using NEXUS, a Local Authority was recently able to identify a property in Kent which was granted planning permission in 1996 and built shortly afterwards, but had never been added to the council tax banding list. Online property resources identified that the property had last been sold in August 2016 for £850,000.

Similarly there have been instances where properties have been deleted following demolition and subsequent rebuilds have occurred and the property has either not been added on to the list again or has been incorrectly deleted. There are also cases where a property has previously operated as a commercial premise, been demolished and replaced with a domestic property and typically it is these kinds of properties which tend to slip through the net.

Using NEXUS, a Council in the South East of England was provided with information in relation to the development of 130 properties, which were built in 1997. One of these properties was added to the list from an earlier date which was incorrect.  As a result, the property was deleted from the list but was not added back on after the deletion.  The property was initially sold in October 1997 and is currently for sale at £349,950.

Implications of permitted development right
Matters have also been further complicated by the ‘permitted development right’ which allows homes to be created without going through official planning system channels. A recent article from LocalGov reports that since 2015 there were 54,162 properties converted from offices to residential use under permitted development. Rather than going through the usual planning process these properties may simply have to obtain Prior Approval beforehand.

Clearly this technology lays the groundwork for being able to identify those properties which have fallen through the gap, but not every Local Authority has the subsequent resources required to then investigate these properties further to verify a match. In these instances a managed service option can be provided to alleviate pressure on in-house staff, with the Council still able to reap the rewards from additional council tax and business rates collections and where applicable payments from New Homes Bonus.

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