Question to the Minister for Public Expenditure and Reform (Deputy Brendan Howlin)
To ask the Minister for Public Expenditure and Reform if he will consider amending legislation in relation to rateable valuation of commercial premises to enable a property occupier/owner to seek a review of the rateable valuation if at any time the value of a property changes, which would have the effect of restoring the situation regarding reviews to what it was prior to the Valuation Act 2001 and would assist in improving the lettability/viability of vacant commercial properties; and if he will make a statement on the matter.
For WRITTEN ANSWER on 08/07/2014
It is important to acknowledge that commercial rates, as a source of revenue, and the rating system generally, are deeply embedded in the local government system. Rates income is a very important contribution to the cost of services provided by local authorities such as roads, public lighting, development control, parks and open spaces. All rates collected within a local authority area are spent exclusively in delivering the public services which are required locally and help to create the environment in which businesses can prosper. Locally elected members adopt the annual rate on valuation (ARV) they consider necessary in order to provide the required services. Rates are a stable source of financing for local government which is not affected unduly by short-term changes in economic circumstances. A system having regard to economic factors such as fluctuations in supply and demand, inherent in the property letting market on an ongoing basis would create uncertainty by providing for continuous change to thevaluation base. Such a system would not provide a stable basis for funding local government and would require significant additional resources to operate.
The levying of rates on commercial property by reference to movements in the letting market rather than valuation would be a significant change and a departure from the long-standing practice of levying rates by reference to property values. The introduction of such a system for rating purposes would not be suitable because supply and demand in the property market can vary significantly from year to year and within and between the various business sectors which would lead to an unstable and volatile valuation base. Therefore, I have no plans to change the method by which valuations are assessed for rating as such a radical move would represent a significant departure from the long-standing practice of levying rates solely by reference to property values.
The Valuation Act, 2001 provides for two key elements in the provision and maintenance of the valuation lists for rating – revision and revaluation. The revision process provides for the updating of valuation lists so that new properties can be valued and added to the list, improved and extended properties can have their valuations updated and properties that have been demolished in whole or in part can have their valuations amended or struck out as appropriate.
Under the current provisions of the Act, an owner/occupier of an individual business premises who has concerns about the valuation of their property or any part thereof, including its rateability or the method of calculation may apply to the Valuation Office for a revision of the valuation. A Revision Officer is then appointed, who may carry out a revision of valuation in relation to a particular property only if a material change of circumstances (MCC) has occurred since the property was last revised. MCC is defined in section 3 of the Act as a change of circumstances, which consist of a new building, a change in value due to structural alterations of an existing building, total or partial demolition of a building or a sub-division or amalgamation of relevant property. The definition, however, does not allow for a revision of valuation where the change in value is due to economic factors, differential movements in property values or other external factors such as road or other infrastructural development in the vicinity of a property.
The revaluation provisions in the Act provide for the revaluation of all rateable property within a rating authority area so as to reflect changes in value due to economic factors, differential movements in property values or other external factors such as road or other infrastructural development in the vicinity of a property. The purpose of revaluation is to bring more equity, fairness and transparency into the local authority rating system – distributing the commercial rates liability more equitably between ratepayers. Following revaluation, there will generally be a much closer and uniform relationship between rental values of property and their commercial rates liability. In essence, the exercise aims to ensure that each ratepayer bears a fair share of the rates burden relative to the value of the property that they occupy. It is not the purpose of revaluation to increase the total amount of rates collected by local authorities. In fact, the relevant legislation (Valuation Act, 2001 and the Local Government Business (Improvements Districts) Act, 2006 provides that the commercial rates income of local authorities in the year following revaluation is capped.
The Valuation Office is currently engaged in a national revaluation programme, the immediate objective of which is is to ensure that the first revaluation of all rating authority areas is conducted as soon as possible.