Valuation process to begin in a year’s time will, for the first time, use a software tool to estimate values and place hundreds of thousands of properties in taxation bands
An algorithm being deployed by HM Revenue and Customs to provide valuations for administering council tax to millions of properties will provide the taxation regime with “greater consistency and quality” – while also delivering significant cost reductions for government.
The Valuation Office Agency (VOA) – which is being scrapped and will shortly be subsumed into HMRC, its parent department – revealed earlier this year that it would use an automated model to deliver the scheduled 2028 revaluation of council tax bands for 1.5 million domestic properties across Wales.
The agency has now released details of the operations of its Automated Valuation Model (AVM) via government’s online repository of algorithmic transparency records.
The AVM is not a singular program but “a series of models” designed to fulfil different functions, beginning with predictions of “property prices… at the valuation date in line with council tax valuation assumptions”.
The algorithmic system is designed to then “identify the closest comparable properties that have sold” and “adjust the estimates to account for the residuals on the sale comparable, and place into Council Tax Bands”.
AVM will also “score the reliability of these estimates” and, finally, “prioritise batches of properties for manual review” by human valuers – who, before the creation of the automated tool, “were deployed to make manual banding assessments” with “no other tools or technology used” in the process.
The record adds: “This tool was designed and implemented to provide first pass valuations to aid council tax banding decisions and to enable valuer resource to target and undertake the most difficult or complex decisions that most likely need the intervention of experienced valuers. The model estimates can also be used to aid in the design of policy.”
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In deciding to create a technology tool, HMRC and the VOA assessed that an ongoing reliance on manual human valuations would be “significantly more inefficient and costly” than implementing an algorithm.
“Our early assessments of the benefits of using mass appraisal include significant reductions in cost and timescales, as well as benefits to customers through greater consistency and quality of valuations,” the record adds. “Initial estimates place the reduction in cost of a revaluation by one-third, compared to carrying out a manual valuation. Moreover, by providing an initial valuation, the VOA can prioritise cases for manual valuation and can better target our professional valuer resource to where they will have the greatest impact, providing more rewarding roles for our staff.”
The transparency document outlines that, even with the automated tool and the efficiencies it provides, “VOA valuers underpin each stage of the model-assisted approach”. The algorithm is ultimately intended to supplement human expertise.
“Valuers use comparable evidence to make their valuation decisions,” the record says. “The estimated values are provided to operational staff, along with the property attributes that led to this valuation and the sales evidence in a bespoke Valuation Tool. Using this information estimates can be verified and adjusted as required. A more thorough explanation of how the model arrived at its value is available to a central team of valuers and analysts, who sense check the estimates.”
Ahead of the 2028 confirmation of new tax bands for Welsh domestic properties, the valuation phase – supported by AVM – will commence in September 2026. There will then be a “five-year revaluation cycle thereafter”.
Taxpayers will retain existing rights “to challenge their Council Tax Bands allocation when the list is first published and further informal routes are available after this”.
The tool was built entirely using internal government digital experts, and “the core modelling team of analysts and valuers have had specific training on the modelling techniques and how the models work”. Other “operational staff are given a high-level overview of the modelling as they utilise the output”, the record indicates.
Since the coronavirus crisis, the VOA has run up some significant backlogs – particularly for those challenging a rating decision. In the 15 months to 30 June 2024, a total of 12,620 such challenges were registered – only 1,870 were resolved by the end of the period, the agency’s statistics reveal.
Ministers recently expressed their belief that adoption of cloud and upgrades to digital services will help improve performance and bite into its caseload.
