Local authorities are about to revise the rateable valuations of approximately 34,000 commercial properties in Dun Laoghaire-Rathdown and counties Kerry, Clare, Galway, Mayo and Donegal. The 5,000 or so properties in Dun Laoghaire-Rathdown were last revised in 2011, so there will be bigger changes in the other counties, which are being revised for the first time under the 2001 Valuation Act.
Rates payable to a local authority typically equate to approximately 20pc of a property’s rent and are a sizeable overhead for occupiers. For all of these properties, the Valuation Office is assessing their rental values as of September 16, 2019 and “Proposed Certificates of Valuation” are due to be issued in February/March.
Similar to the rent-review process, the valuations are based on open market lettings of similar properties in late 2019. The revisions also take into account any changes to the property, or local infrastructure, which may have affected the rental value. The occupier then has 40 days within which to make an appeal.
The pending revision throws up a series of conundrums, for both occupiers, and the authorities. The revision was due last year, but was postponed because of the pandemic. It may yet be postponed for this year, but then, the valuation date from 2019 becomes further detached from when the revised rates become payable, which is from the 1st of January 2022.
To some extent, that’s an academic argument because the local authorities can set a different “rate in the pound” each year, which is multiplied by your rateable valuation to calculate your rates bill. Thus, if the local authority needs to increase it’s budget, it increases the “rate in the pound” and everyone pays more.
However another issue arises in that the valuation date is before the pandemic and it can be argued that some sectors have been hit much harder than others, possibly for the long-term, and that the weighting of rates levied on those sectors should be lower, for example, in retailing and hospitality.
Declan Bagnall, director of commercial rating experts Bagnall Doyle MacMahon told me that the pattern throughout the country for properties already revised for the first time is that retailing and petrol station valuations have tended to increase, offices stayed similar, industrial properties reduced and pubs and hotels go both up and down, depending on how they are trading. He made the interesting point that the swathe of new windfarms throughout the west have become strong rates payers and that this income may help to replace funds lost in other sectors.
A further nuance Mr Bagnall pointed out is that pubs and hotels are valued on the basis of turnover and it will be interesting to see how badly turnovers on the western seaboard were hit last year, given the strong summer “staycation” season, compared with 2018/19.
There can be delays in valuing new properties and agents marketing new buildings should check the progress of their local rating list as avoiding rates for three years or so, is a significant advantage.
If a building is vacant on the day that your local authority strikes the “rate in the pound,” and is available to let, the owner may be entitled to rates relief, which varies among the authorities.
Property occupiers should take expert advice when they receive the Proposed Certificate of Valuation, and consider making an appeal, as it may be many years before the next revision.