Sydney councils are pushing for some owners of expensive properties to pay $500 a year more in rates under a radical proposal to change the way levies are calculated before the state government.

The Independent Pricing and Regulatory Tribunal, which sets rates, has proposed a shift in the way rates are assessed away from the present focus on a property's "unimproved value", which largely captures the value of the land, to their "capital improved value" which takes into account the value of the actual property.

Some Sydney councils are pushing for rates to be calculated on a property's market value not its land value. Credit:Louise Kennerley

The impact of such a change would mean that property owners with the same sized land would be charged different rates depending on the value of their house or apartment.

The plan has been supported by a number of Sydney councils on the grounds it would be a fairer way of apportioning rates that pay for services like road maintenance and childcare centres.