Water Bills - Rateable Values

I am wondering if someone can help me clarify water bills and how they are calculated with the rateable value of your home.


My current provider - Severn Trent
No meter - paying £735.50 per year on direct debit


My property rateable value is showing 597 (don't know where this figure comes from) and then x 123.2 pence.


I have tried to clarify this with Severn Trent but not got any answers clearly. Yes I know I can save significantly going to a water meter (which I am seriously considering) but I have not been able to clearly find where these 2 figures come from.


An example again within my family:- 4 years ago my younger brother was purchasing a house just 7 doors along from our parents. my brother wanted to find out how much he was going to pay for water per year (for budgeting). The guy on the phone from Severn Trent was very cagey and wanted to know the house number etc etc. My brother gave the approx. location but didn't reveal the house number.


My parents do not have a meter, live in a decent size 5 bedroom house and only pay £23 per month for as much water as they like ( and have decent supply pipe and pressure) Only 7 doors along the road, my brother finds out for a smaller house the previous owners were paying just under £1000 per year for water without a meter!! The band rating for the 2 properties were identical but the water price was nearly 4 times the amount.


I am fairly confident this sort of charging cannot be consistent and was taking advantage of a senior citizen. When I heard this was living in a small house with a meter and we paid around £28 per month for water. A year ago I moved to a larger house and have had my water bill double.


If you can help me understand where Severn Trent get these 2 magic numbers from it would be helpful


Z x Y
Z = (random number know as rateable value but you don't know what this is!!)
Y = (value of water) - is this the same for any Severn Trent customers?


You will all see there is a lot of money wasted on water and this is water supply only as we have a septic tank and no rain water drainage going off the property.

Comments

  • Cardew
    Cardew Posts: 29,036 Forumite
    Name Dropper First Anniversary First Post Rampant Recycler
    edited 9 March 2017 at 12:42AM
    Welcome to the forum.

    The Rateable Value(RV) of a property was the basis of 'local taxation' prior to April 1990. On that date it changed to The Poll Tax and subsequently the current Council Tax.

    The RV was the notional rental income the property could command. For most of England and Wales the last general assessment of RV was in 1973 and properties built after that date were individually assessed until 1990 when the RV scheme was axed.

    As said above, the notional rent a property could command was based on many factors - size, location, amenities, modernisation(e.g central heating, new kitchen/bathroom etc) garage etc etc.

    Thus it was possible for two identical properties in the same location to have a widely differing RV if, say, one was run-down and the other modernised at the time of assessment in 1973. Of course if the run-down property was subsequently modernised the theory was that property would be re-assessed and get a higher RV. However owners were not likely to volunteer their property for re-assessment, and many councils didn't bother.

    Post 1990 the situation got even more stupid. There were mansions that were virtually derelict in 1973 and had a 'peppercorn' RV of perhaps £50 as nobody would rent such a property. Subsequently these mansions could be completely refurbished and are now worth £millions and in the highest Council Tax bracket, but the still retain their peppercorn RV; so pay lower water charges than a 1 bed flat on a council estate. The Water Act that introduced mandatory water meters for all properties built post 1990 laid down that any substantial changes to a property meant a meter should be fitted; however again nobody bothered.

    When compulsory meters for new properties was introduced in 1990, the Government(in the Water Act) made a concession that existing properties could retain charges based on their RV. However there was provision that on change of owner or tenant a meter could be fitted - indeed should be fitted. Some companies enforced that provision, most didn't!

    Whilst water companies would gain more revenue from many properties if meters were fitted, the way these companies are financed gives them little incentive to fit meters. The Regulator(ofwat) allows each company to raise £xxxmillion in revenue, and subject to meeting certain targets, make £xxmillion profit. Thus if they raised, say, an extra £million from enforcing metering, they would have to reduce other charges to stay within the revenue limit imposed by the Regulator.

    Now in defence of the Regional Water companies(not something that comes easily to me!) they have no mechanism to alter the RV of a property, They inherited properties with a fixed RV in 1990 under The Water Act.

    They also have no way of knowing what houses have been modernised; they have no authority to inspect inside properties. I know personally of an old unmodernised cottage with a very low RV that was torn down and a huge 3 storey 7 bed house built; it had full planning permission and met building regulations, but retains the same low RV for water charges.

    Incidentally if your property has a RV of £597 that charge of £735.50 with Severn Trent is just for water. Unless you are on septic tank sewerage, you face a bill of almost as much again for sewerage. This charge depends on which of the 8 areas of Severn Trent you reside. Some properties on the edge of Severn Trent's area have their sewerage charges from another company. That charge will also be base on your RV of £597 e.g 597 x 106p = £632.

    Edit;
    Missed your last paragraph about being on septic tank drainage; but it would apply to all those on mains drainage.

    There are 8 charging zones for Severn trent, each with a different cost for water, you are in one of the highest zones; some others are approx 20p per £1 RV cheaper.
  • Thanks for helping me understand. I can see it is confusing and is something you need to be aware of when budgeting for moving home.
  • Cardew
    Cardew Posts: 29,036 Forumite
    Name Dropper First Anniversary First Post Rampant Recycler
    The 2016/17 schedule of charges for Severn Trent are:

    https://www.stwater.co.uk/content/dam/stw/about_us/documents/your-rights-as-a-customers/SUMMARY-OF-CHARGES-201617.pdf

    For next year 2017/18

    https://www.stwater.co.uk/content/dam/stw_businesses/our-charges-2017/svt-hh-summary-of-charges-2017-18.pdf

    Paying 123.2p per £1RV places you in Charging Zone 7. The cheapest is Zone 8 paying 98.36p per £1RV.

    If you were metered you would pay 139.98p per cubic metre(m3) plus £28.34pa standing charge.

    The average water consumption in UK is approx 55m3 per person per year; although many seem to use much less. Thus if you had 8 people living in your house, all with average consumption, you would pay less than your present £735.50.

    You can also have a meter fitted(it is free) and if metered charges are not cheaper you can revert to your current RV based charges within 1 year(might be 2 years)
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