Banding

There are of course different ways of calculating the site premium:
- taking rental values and deducting an amount to cover the "bricks and mortar" cost;
- working out an overall average rental value per square yard in each area and multiplying that by plot sizes;
- if a street is a jumble of wildly different type buildings, simply working on the basis of plot widths;
- using recent selling prices as a proxy for rental values;
- we can do individual per home/plot valuations or use average figures for each category of home/plot;
- having a sophisticated system of valuing homes/plots in terms of 'units' or a rough and ready one;
- we can choose smaller or larger valuation areas;
- we can restrict ourselves to more recent data or include older data;
- we can adopt a points-based system, for example one point for every 50 sq yards of land occupied (so a flat in a high rise block gets half as many points as a similar flat in a low-rise building); one point for each habitable room or off-street parking space; adding an extra two points for homes facing a park; adding two points for homes within 500 yards of the nearest station and deducting two points for those more than a mile away.

... each with their advantages and disadvantages, so there is no point pretending that any method gives us some scientifically verifiable figure accurate to three or four decimal places, so it makes sense to put homes into Bands (like Council Tax bands) and all homes/plots in the same Band in the same valuation area pay the same LVT.

Simply using the Council Tax bands, with a ratio of 3-to-1 between the largest and smallest homes/plots in each local area probably does not capture the full range, but has the advantage of simplicity. Clearly, a few homes at the very bottom end will end up being slightly 'overtaxed' and a few at the very top end will still be slightly 'under taxed' but those are acceptable losses - worst case, the tax would act like a progressive poll tax.

There is a trade-off between administrative considerations - a few wide bands means simplicity and fewer appeals; lot of narrow bands requires more sophisticated valuations and will result in more appeals - and the aims of a fair and efficient LVT system (which in theory would require individual valuations of each plot and many more appeals). A balance has to be struck.