Treasury Minister Eddie Teare will seek Tynwald approval next week to spend up to £2m of reserves to carry out a rate revaluation of homes.
The government has pledged to complete the rate revaluation of the island’s domestic housing stock by January 2016.
Chief Minister Allan Bell has previously said it would be impractical to carry out physical inspections of more than 40,000 domestic properties by the February 2016 deadline and so it is intended that valuation office records will be used and valuations based on capital values across nine different bands.
That deadline was agreed at the October sitting of Tynwald following a debate on a select committee’s report into the domestic rating system.
The committee was set up to investigate a petition of redress of grievance presented on Tynwald Day back in 2009 by David Buttery.
It made a series of recommendations including that a revaluation of ratable values of homes should be carried out every five years - irrespective of whether there is any reform of the rating system.
The last general rates revaluation took place in 1972 and was based on rental values from the late 60s.
This was at a time when properties in rural areas were let at low rents, resulting in lower rateable values than properties in towns and villages.
In Tynwald next week, Mr Teare will seek the court’s approval to draw down up to £2m from the reserve fund in order to deliver the domestic rating revaluation project.
In his explanatory memorandum to members, he says that Treasury does not consider the outdated rental valuation system is appropriate and believes it necessary to move towards a capital banded rating system.
He says that in order for a reformed system and revaluation to be achieved by the February 2016 timescale, it is necessary that a project team be quickly set up to deliver the project.
A public consultation will begin this month and run until March, and domestic property revaluations will begin in April. Political and legislative approval will be needed by December next year for implementation to take place from April 1, 2017.
But Mr Teare notes: ‘Implementation in this manner carries a risk of valuations being subsequently abortive should the relevant legislation upon which the capital valuations are then based not being supported in the branches or receive Royal Assent.
‘Valuations will be carried out utilising existing data from the valuation office records although it is expected that a valuation on this basis will result in a considerable amount of appeals which is unavoidable within the timescales.
‘Subject to consultation and final endorsement valuations will be provided on the basis of a nine band capital value arrangement as previously reported to the Council of Ministers.’
‘The timescales for delivery are extremely challenging not only in relation to the valuation process but also to introduce new primary legislation,’ he adds.
Mr Teare said it had been decided to fund the project from reserves rather than put a charge on the rates now or recover costs from future revenues.
He pledged that expenditure will be incurred only up a level needed to achieve the objective but that costs may approach £2m.
The Treasury Minister said ‘significant’ external professional valuation and legal advice will be required to meet the deadline - although there was uncertainty over budgetary requirements and availability of sufficiently qualified valuers to deliver the project.
He pointed out the revaluation process will have an impact on domestic rates bills.