UK homes to be valuated using an algorithm
Key Points
- The Valuation Office joined HMRC in April 2026, covering 27 million homes and 2.1 million commercial properties
- Automated valuation models will deliver the Welsh Council Tax Revaluation and High Value Council Tax Surcharge valuations
- A model-assisted pilot for business rates is planned for the 2029 Revaluation
- New property Council Tax banding to be cut from 3 months to one month by October 2027
- VO customer satisfaction was 64% in 2025 to 2026 against an 80% target
The value of UK homes, and the Council Tax bill attached to it, has always rested on human judgement. This has typically been a mixture of a surveyor’s assessment, and comparable sales.
That era is ending, and in its Transformation Roadmap update published on Thursday (2 July), HMRC set out plans for automated valuation models to take on a growing share of the work of pricing Britain’s property.
The new plan will be undertaken by the Valuation Office, which became part of HMRC in April 2026, and is responsible for calculating Council Tax bands for 27 million homes and rateable values for 2.1 million commercial properties, underpinning more than £60 billion in local taxation every year.
The Valuation Office said it had been developing world-leading expertise in what it calls ‘model-assisted valuations’: automated valuation models, or AVMs, paired with professional valuer oversight.
The upcoming Council Tax Revaluation in Wales will be delivered this way, as will valuations for the High Value Council Tax Surcharge. A pilot applying the approach to commercial property is planned for the 2029 business rates Revaluation.
AVMs are not actually a new technology, and mortgage lenders and property portals have used them for years to estimate prices from sales data, location and property characteristics. What is new is the state deploying them to determine tax liability at national scale.
The Valuation Office was careful to stress that valuers would underpin every stage of the model-assisted approach, with humans checking what the models produce. But the HMRC was equally candid about the technology being introduced to reduce reliance on surveyors, automate simpler assessments, and free scarce professional judgement for complex cases.
A new Valuation Operating System went live for Council Tax in 2025 and will roll out to business rates between 2026 and 2027. An AI tool called SmartMail now automatically sorts and routes customer enquiries. Together, the technology changes are projected to deliver around £18 million in efficiency savings by 2030.
There are expected to be some immediate benefits for homeowners and businesses. The Valuation Office has committed to cutting Council Tax banding for new properties from around three months to one month by October 2027, resolving over 90% of Council Tax band reviews within two months by March 2027, and more than doubling the proportion of business rates challenges resolved within 12 months.
It is hoped that the technology will also improve outcomes. Only 64% of Valuation Office customers were satisfied with its service in 2025 to 2026; the target is 80%. As such, any algorithm that bands your home faster is likely to be welcome, provided it actually works.
