SAVVY householders in Kirklees are saving thousands of pounds in council tax this year after having their homes re-banded.

But that has left a £668,000 black hole in Kirklees Council coffers.

The council has revealed exclusively to the Examiner that between April and October 613 homeowners secured a reduction in the council tax banding of their homes.

That has meant a cut in their bills for this year – and back-dated rebates to when they moved into their home.

In seven months the council has paid out a total of £668,762 – an average of more than £1,000 each.

Homeowners who believe their properties are in the wrong band can appeal to the Valuations Office in Halifax, part of HM Revenue & Customs.

Officials will then investigate and if the band is downgraded councils are ordered to cut bills and pay out with immediate effect.

And if one house on a street is re-banded, other similar properties will automatically be downgraded as well.

Kirklees Council leader Mehboob Khan said re-banding caused a financial headache for the council, but added: “We don’t want anyone paying more council tax than they should be.

“Having said that, re-banding is having an impact on the council’s revenue.

“The council has to pay this money out of its own funds and the cost falls on all taxpayers.”

Clr Khan said the £668,000 cost so far this financial year was the equivalent of the council’s monthly glass collection service.

In previous years the loss of income from downgraded bandings was off-set by the number of new homes built.

But since the recession and property slump there are fewer new homes.

Just 589 new properties have been built in 2012, according to council figures.

Council tax banding can go up as well as down and this year 37 homes have been lifted into a higher band.

Council tax downgrades in the first seven months of this financial year are already above that for the whole of 2011-12.

Council figures show there were 557 banding reductions last year.

Council tax re-banding has proved a controversial subject in Huddersfield in more ways than one.

Council Tax Review, a firm run by businessman Jack Darrell Henry, operated from Huddersfield for several years, promising to win reductions in council tax for unsuspecting homeowners.

The firm, also known as Reband UK, took typical upfront fees of £175 but clients often heard nothing for months on end.

Mr Henry, subsequently revealed as a disqualified director, was given a suspended prison sentence in January for illegal trading.

In September his company Reband UK was wound up by the Government’s Insolvency Service in the public interest.

The High Court in Manchester was told that the firm took more than £200,000 from 1,167 clients – but had won rebates for just seven of them.

During publicity surrounding Mr Henry the Valuations Office stressed that homeowners could lodge their own appeals free of charge – and that may have fuelled the rise in successful claims in Kirklees.

Clr Khan said: “People are generally more aware of re-banding because of previous media reports and also because everyone is looking at ways of reducing household costs.”

Clr Khan said that because of the stagnant new homes market the council had to balance its council tax income in other ways.

“Whereas before we could rely on new homes, now we have to fund the loss of council tax revenue through efficiency savings and under-spending on other budgets,” he said.

The last homes re-valuation was carried out in 1993 as the council tax replaced the community charge, or poll tax.

Clr Khan said the current problems dated back to the early 1990s when the Conservative Government introduced the council tax in a “mad rush” and valuation mistakes were made.

“This is one way to ensure the mistakes of almost 20 years ago are put right,” added Clr Khan.

“It’s good that if one property is rebanded on a street then others of the same type also change and other residents automatically enjoy the benefits of that correction.”

The Official Receiver is now investigating Reband UK and will report later.