LONDON: The U.K. government has postponed the proposed revaluation of millions of homes in England, which would have led to substantial increase in council taxes. The review was expected to have brought one in every three homes in a higher tax band, mostly in south of England.

A senior government official said the revaluation exercise will be postponed — and not cancelled. The last time the valuation was conducted was in 1991.

The council tax is a local tax based on property prices with houses put into eight categories. Alongside the revaluation, there is an independent evaluation of the council tax now under way conducted by Sir Michael Lyons. The government official hinted that the government is waiting for the Lyons report. Sir Michael is intending to publish his recommendations in December, with implementation due to coincide with revaluation in April 2007.

The revaluation has been described as a time bomb for the Government because property prices — in London and the South East in particular — have risen significantly since the last valuation. There has been opposition to the exercise with many people saying they are already paying higher rates of council taxes. Under the existing eight band system, owners in the top-rate band H are paying twice as much as people on band D.

The revaluation was to cover all the 22 million English homes and possibly have them rebanded, based on their value on April 1 this year. The proposal envisages that anyone whose house has risen in value by more than the national average since the 1991 valuation is likely to move to a higher tax band in April 2007. In the 1991 valuation, the average house price was 73,000 pounds. It is now around 180,000 pounds. However, houses in London, the South East and South West could command prices in the range of 310,000 pounds to 440,000 pounds and the owners could expect a tax increase of 1,000 pounds annually. Pensioners would have been the hardest hit by the proposed increases.

Revaluation has already been done in Wales, and it has shown that 58 per cent of homes remained in the same tax band, while about a third had moved to a higher band. However, in some areas where house prices have gone very high, the tax increase has been really high — 64 per cent in Cardiff and 52 per cent in Wrexham.

While the households paid 8.8 billion pounds in council taxes in 1996-97, it was 16.4 billion pounds in 2003-04, an increase of 86 per cent.