Paul Kehoe (Wexford, Fine Gael) | Oireachtas source

The Deputy will be aware that under Irish law there is a distinct separation of function between the valuation of rateable property and the setting and collection of commercial rates. The valuation of commercial properties for rating purposes is the responsibility of the Valuation Office. The rate payable by a ratepayer in any calendar year is a product of that valuation multiplied by the annual rate on valuation, ARV, set annually by the elected members of the rating authority. The ARV was formerly known and is still often referred to as the rate in the pound.

The valuation system is operated under the Valuation Act 2001 and is underpinned by a number of long-standing valuation principles, as well as interpretation of the legislation by an independent valuation tribunal and the higher courts. The system is based on the concept of net annual value, which is derived by estimating the rental value that the property might command as of the particular valuation date specified in an order made by the Commissioner of Valuation - who is independent in the exercise of his function - as provided by the 2001 Act. The rateable value of a shop, for example, is the yearly rent for which it could be let on the assumption that the tenant was responsible for rates, repairs and insurance. The basis of assessment applies to all properties irrespective of whether they are rented to a tenant or owner-occupied.

A fundamental element of valuation law, practice and procedure is the attainment of equity and fairness between ratepayers through the establishment of correct and uniform valuations. Accordingly, the function of the Valuation Office is to produce and maintain valuation lists for each rating authority area which reflect the estimated rental value of each property on a specified day relative to the estimated value of every other property on that list on that date. Of course, the values of individual properties and categories of property change over time as a result of differential shifts in rental values between property categories and locations. This is a recurring phenomenon which reflects market movement and economic activity. The only way to address these shifts is through a revaluation process. Outside of the rating authorities that have been valued to date - for example, South Dublin, Fingal and Dun Laoghaire-Rathdown - the rates in all other rating authority areas are, at present, based on valuations of properties which reflect market conditions and relative values prevailing in 1988. The values in some sectors or locations will have increased significantly since 1988, while other parts of the market may not have fared so well. This is clearly not a satisfactory situation.

Revaluation is an exercise in redistribution of the overall rates liability in a rating authority area to maintain the fairness of the rating system. It is the process that brings rateable values back into line with current property rental values. It results in the production of a new valuation list that contains modern valuations for all rateable properties in the rating authority areas being revalued. The process is that all industrial and commercial properties in a rating authority area are revalued by reference to a specific valuation date and all new valuations in that rating authority area become effective at the same time. The ultimate objective is the production of a valuation list for each local authority which provides equity, uniformity, stability, certainty and predictability for ratepayers, local authorities and the government, and brings the valuations on which rates are assessed back into line with current property rental values.

Following the first revaluation in each area, the Valuation Act 2001 requires the Commissioner to subsequently carry out recurring revaluations at intervals of a minimum of five years and no more than ten years. This will ensure that movements in the property market are tracked and reflected in rateable valuations within a reasonable timeline, which has not been the case heretofore. Accordingly, individual valuations are established and remain fixed for a five- to ten-year period. On the other hand, the ARV, as determined by the elected members of the rating authority, may vary from year to year and therefore so can the rate payable annually by an individual ratepayer.

In line with Government priorities, the revaluation programme will be expedited so that the first revaluation in 25 years can be completed as soon as possible across the country. In keeping with Government policy, the Minister, Deputy Howlin, has introduced the Valuation (Amendment) (No. 2) Bill, 2012, which is currently before the Oireachtas. The primary purpose of this legislation is to accelerate the revaluation process. The Bill also includes new features which provide for the streamlining of the valuation appeals procedures available to ratepayers. Also, as part of the effort to accelerate the national revaluation programme, it provides the legislative basis for carrying out a revaluation based on self-assessment by ratepayers and also for the external delivery of elements of the valuation process. I understand that both of these approaches will be piloted in revaluations to be conducted following the enactment of this Bill.

Revaluation does not result in an increase in the total amount of rates collected by a rating authority. The Valuation Act 2001 empowers the Minister for the Environment, Community and Local Government to cap the total amount of rates in the year following a revaluation. This provision has the effect of ensuring that revaluation acts as a distribution of the rates liability between ratepayers in an equitable fashion relative to the values of the properties they occupy. Accelerating the national revaluation programme is a priority for the Government and is a feature of the Action Plan for Jobs 2012. The Valuation Office has achieved considerable momentum on the programme in recent years. The process is complete for South Dublin County Council, Fingal County Council and Dun Laoghaire-Rathdown County Council, while revaluation of the three Waterford rating authorities, Dublin City Council and the two Limerick rating authorities is well under way. The revaluation processes in the three Waterford rating authorities and Dublin City Council are currently at the representations stage. This a significant stage at which the ratepayer can engage actively with the Valuation Office. The objective is to ensure the valuation lists are correct before they are published later this year.

The representation phase provides the ratepayer with an opportunity to raise with the Valuation Office any elements of a proposed valuation considered to be inaccurate and to provide fresh evidence material to the ultimate determination of the valuation. There is also a statutory right of appeal to the Valuation Tribunal, an independent body set up for such purposes, and, on a point of law, to the High and Supreme Courts.

The programme is particularly important given the significant changes in rental values following the economic downturn of recent years. It is further the case that most rateable valuations reflect the economic circumstances that prevailed a quarter of a century ago. While property values have fallen generally, given that the purpose of the programme is to redistribute the overall rates liability, some ratepayers will obtain a reduction while others experience an increase from the process of redistribution. Overall, revaluation results in a fairer distribution of the rates burden.

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