Local authorities have a statutory obligation to levy rates on any property used for commercial purposes in accordance with the details entered in the valuation lists prepared by the Commissioner of Valuation under the Valuation Acts 2001 to 2015. The Commissioner of Valuation has responsibility for valuation matters, including the revaluation of properties, and is independent in the performance of his functions under the Acts.
The Valuation Acts provide for the revaluation of all rateable property within a rating authority area to reflect changes in value due to economic factors such as business turnover, differential movements in property values or other external factors and changes in the local business environment. The Commissioner has notified my Department that revaluations have recently concluded in eight local authorities: Cavan, Fingal, Louth, Meath, Monaghan, Tipperary, Wexford and Wicklow. The revised valuations will be effective from 31 October 2019 and will be effective for rates purposes from 1 January 2020.
It is not the purpose of a revaluation to increase the total amount of commercial rates collected by local authorities. Revaluation results in a redistribution of the commercial rates liability between ratepayers. While an individual occupier’s rates liability may increase or decrease, the revaluation will not increase the overall commercial rates income of the local authority.
Section 56 of the Valuation Acts 2001 to 2015 provides that the Minister for Housing, Planning and Local Government, having obtained the consent of the Minister for Public Expenditure and Reform, makes a Rates Limitation Order (RLO) following a revaluation, directing a rating authority to limit the overall amount of rates income in the following year to the total amount of rates liable to be paid to it in the previous year, plus an element of buoyancy for valuations of newly constructed property and an adjustment for inflation as measured by the Consumer Price Index. RLOs have been made for each of the local authorities that have undergone a revaluation to date.
The intention of section 56 was to provide that the impact of a revaluation would be revenue neutral for a local authority. However, due to successful appeals by ratepayers following revaluations, the impact of the revaluations has resulted in a net decrease in rates in the year following a revaluation.
The Local Government Rates and Other Matters Act 2019 modernises further the legislation governing commercial rates. Section 21(d) of the Act amends the Rate Limitation Order formula to allow for the inclusion of a factor to take account of the level of appeals. The factor is set by the Minister in consultation with the Commissioner of Valuation. This factor will be included in RLOs that will be made in the coming weeks in respect of the eight local authorities where revaluations have concluded this year.