Simon Harris (Wicklow, Fine Gael) | Oireachtas source

My apologies. We have a copy available now.

This legislation is concerned with the valuation of property for rates purposes but not with the setting or collection of rates. The basis of assessment for valuation purposes is the net annual value of a property. The net annual value of a property is equivalent to the annual rent, exclusive of all payments in respect of rates, taxes, repairs and insurance, which a property could reasonably be expected to command. The rateable occupier, the person who has to pay the rates, is the person in the immediate use and enjoyment of the property, usually a tenant or an owner occupier.

The national revaluation programme, which was provided for in the Valuation Act 2001 and which commenced in the greater Dublin area in 2005, is the first general valuation since the middle of the 19th century, and is a significant undertaking involving some 146,000 properties. The Valuation Act 2001 provides that valuation be carried out on a rolling basis. This means that each rating authority area will be separately valued as part of a planned sequential valuation of the whole country. The sequence is decided by the Commissioner of Valuation, who is independent in carrying out his function.

A key motivation for introducing the amending legislation is to expedite the national revaluation programme of commercial and industrial properties. Revaluation is all about rebalancing the overall rates burden in each local authority area, and I am conscious that there is pressure for the work to proceed at a more brisk pace. As stated, valuations are based on rental values. If there is to be a fair distribution of the rates burden, then valuation should be based on modern rental values and not those that were used as the basis of valuations 25 or more years ago.

Completion of a revaluation in a rating authority area will help to address some of the issues that arise in relation to the rates system. Rates are a charge levied annually on commercial property and are a necessary and stable source of funding for local authorities. Since a revaluation seeks to address movements in the relative values of property over time, a revaluation will offer respite to those that may have an unduly high rates bill for historical reasons. At a more aggregate level one could, in some cases, see a shift in the rates burden from a town centre to a new out-of-town retail facility. Where that occurs, revaluation may contribute positively to making town centres more attractive to prospective businesses.

Revaluation is a very important element in achieving correctness, equity and uniformity of valuations within a given local authority area, as it is the means through which changes in economic circumstances since the last revaluation are taken into account. Revaluations will be on a cycle once the first one is completed in a rating authority area, and each revaluation will be completed not less than five years and not more than ten years after the previous revaluation. Completing the first revaluation and getting all rating authorities on to the five-to-ten-year cycle will constitute a significant positive change to the valuation and rating system.

Although considerable progress has been made in recent years, there is still much that needs to be done. The present position is that, following the completion of revaluation in the four local authority areas in Dublin, the three former local authorities in Waterford and Limerick, more than 48,000 properties have been revalued. While that represents more than 33% of all rateable properties, it constitutes approximately 57% of the valuation base for levying rates.

The revaluation programme needs to move at a faster pace to bring the benefits of a modern valuation base to the rates system. In 2001, when the previous piece of legislation was being introduced, the expectation was that the complete revaluation of all commercial property would take ten years to complete. This assumption has proved over time to be wide of the mark and hugely optimistic. The current target for the completion of the revaluation programme is 2018.

Revaluations completed to date show that approximately 58% of properties will see a reduction in their rates bill and approximately 38% will see an increase, while the remainder are properties with no change or that are being rated for the first time. Generally speaking, and depending on the property category, use and location, of those that see a change in their rates liability, approximately three quarters see either a reduction or an increase of less than 40%. Some have seen very significant increases or decreases, but these have been examined and have occurred for good reason, sometimes because they should have been the subject of a revision of their valuation some time before the revaluation exercise took place.

As outlined, there are many positive reasons for having a rolling revaluation programme. The Bill seeks to introduce a number of measures to speed up the process and includes allowing elements of the work to be outsourced, the employment of computer-based methodologies and more participative involvement of the occupier in valuing property through a process that is referred to in the Bill as occupier-assisted valuation. I am proposing to make enabling provisions that would allow the commissioner to assign valuation work to valuers who are not officers of the Valuation Office. Currently, the commissioner can only assign valuation work to a member of his or her staff. This amendment will allow the commissioner to engage with the private sector directly through a tendering process. This would augment the internal capacity of the Valuation Office, increase the resources devoted to the revaluation programme and accelerate the delivery of the revaluation project. The commissioner intends to carry out a pilot project involving the use of external valuation providers. This is an innovative advance and presents a unique opportunity for a first public-private sector engagement in this area of the public service.

To complement these initiatives, there is provision to enable the Commissioner of Valuation to use general market data, or aggregated data, including statistical and computer-aided techniques, to assist in estimating the net annual values of groups, classes or categories of properties, where appropriate.

The use of computer-aided techniques is commonplace in other jurisdictions. It adds to the efficiency of valuation determination and also contributes to the accuracy and equity of revaluations. This is now provided for in section 5 of the Bill, amending section 13 of the current Act. A demonstration from an outsider's perspective of what technology can add to the system can be seen by using the detailed online map of all valuations available on the Valuation Office website.

I am also proposing to make enabling provisions in the Bill to give the commissioner capacity to introduce an occupier assisted valuation option for the valuation of commercial property. Initially, this would be done in one local authority area on a pilot basis. Section 12 of the Bill provides for the insertion of a new Part 5A dealing with occupier assisted valuation. Provision is made for the Minister to make regulations on the operation of occupier assisted valuation. In practical terms, this process will involve a more participative approach between the Valuation Office and the occupier than exists with direct valuation.

The occupier will be engaged at a very early part of the process. Guidance will be available to the occupier on the measurement of his or her premises, together with indicative valuation levels for the area in which the property is located. The occupier will return his or her valuation and valuations returned will be subject to a check by the Valuation Office. If the Valuation Office decides to change the valuation returned, the occupier will, as in all other situations, be able to make representations to the Valuation Office and appeal a decision to the Valuation Tribunal. The process will be more transparent to the occupier and bring a greater involvement and understanding of how the valuation is arrived at, which should demonstrate the efforts made to arrive at a correct, equitable and uniform valuation for all properties in the rating authority area. The progress made to date in Dublin, Waterford and Limerick, the experience gained in those revaluations and the measures in this Bill provide the platform for an accelerated completion of the revaluation of the remaining local authorities.

The Bill updates the valuation code to accord with modern conditions. The Bill corrects several identified deficiencies in the current legislative framework based on the practical experience of the Valuation Office, the Society of Chartered Surveyors and other stakeholders working with the current legislation over the past decade or so.

The Bill aims to streamline aspects of the current appeals process. This will also help to accelerate the pace at which the national revaluation programme is proceeding while ensuring in-depth engagement between the ratepayer and the Valuation Office in fixing the net annual value of a property. The Bill will retain the right of appeal to the tribunal where ratepayers are dissatisfied with a valuation and to the High Court on a point of law.

Under the current legislation, the ratepayer has the right to make representations at revision and revaluation stage to the Valuation Office in regard to the proposed valuation. This was a new feature of the valuation process introduced under the 2001 Act. It is, in effect, a first-instance appeal for which no fee is payable. In addition, the traditional right of appeal to the commissioner against the decision of the revision officer was then retained, as was the right of further appeal to the Valuation Tribunal. This process affords the ratepayer three opportunities to contest a valuation assessment. There is also a right of appeal to the High Court on a point of law.

In the modern context, streamlining this process is essential. It will allow the commissioner to deploy resources most efficiently in revising and revaluing properties on an ongoing basis. My officials have examined comparable appeal systems in other jurisdictions and have found that, in general, there are no more than two opportunities to appeal or raise an objection to a valuation assessment, while our current system currently provides three opportunities to appeal, or raise an objection to a valuation. The existing additional right of appeal to the higher courts on a point of law will remain.

The comprehensive consideration of submissions made by ratepayers at the representation phase, which was introduced by the 2001 Act and the right to raise issues of rateability or quantum at tribunal stage, has convinced me that the right of appeal to the Commissioner of Valuation could be safely disposed of without unduly diminishing the rights of occupiers of property. Section 16 of the Bill proposes to remove this appeal stage. The Bill also provides in sections 11 and 14 for an extended period, from 28 days to 40 days, to make representations to the Valuation Office before the final valuation certificate is issued. Once the final certificate is issued, there is a right to appeal the decision to the independent Valuation Tribunal. As with all such appeals, a point of law can subsequently be appealed to the courts. Thus, the rights of ratepayers to due process is amply catered for in this legislation. The extended period of time in which to make representations will be welcomed by the business community.

Section 7 clarifies the criteria to be used in determining values when a revaluation is undertaken. It gives an equal weighting to correctness of value, equity and uniformity, thus codifying an important recent judgment of the High Court, by Ms Justice O'Malley, on the interpretation of the 2001 Act. Henceforth, these criteria will now be used by appellants in grounding their appeals and by the tribunal in considering such appeals following a revaluation. These provisions were the subject of much debate both in the Seanad and during a comprehensive engagement with stakeholders. An avoidance of doubt amendment to section 19 of the Bill, introduced on Report Stage in the Seanad, was widely welcomed by Senators on all sides of the House and by stakeholders, as a resolution to remaining concerns around the future interpretation of these provisions. I bring the Bill to this House in a better state as a result of that Report Stage amendment.

Section 15 of the Bill introduces a new provision to equip the commissioner with additional authority to address anomalies on the valuation list. This is an important provision. This amendment is to provide for exceptional circumstances where a decision by the revision manager not to change a valuation would otherwise lead to inequity and a lack or diminution of uniformity of value between certain properties in the same rating authority area. This might include a situation where there has been no material change of circumstances to justify a revision under section 28. The example often cited is where a service station has been bypassed by a motorway but no material change of circumstances, as defined in the legislation, technically exists which would bring about a revision and consequential reduction of the valuation level and there is no existing statutory power to address the problem. In such exceptional cases, the commissioner will have discretionary powers to direct a revision manager to amend the valuation of a property which he or she considers to be inaccurate. The commissioner will no longer have to rely on determinations of the Valuation Tribunal or the higher courts to address such anomalies. The new section 29A replaces section 40 of the Act which is proposed to be repealed by section 21 of the Bill. I wish to take this opportunity to emphasise that the purpose of this new provision is to address exceptional individual anomalies without setting aside the material change of circumstances provisions which have prevailed since the 2001 Act was implemented.

I will outline the new exemptions provided in the Bill. Section 38 of the Bill introduces exemptions for two categories of properties - property used for not-for-profit child care and community sport. A very conservative approach has been taken to the extension of exemption from rates to any grouping. Commercial rates are a key part of local government funding and if local government funding is to be maintained, then it is the remaining ratepayers who pick up the tab where a class of property is exempt. Hence, the conservative nature of the provision for exemptions I have adopted in this Bill. Any unjustified extension of exemption is very unfair on existing ratepayers who must pick up the burden. New exemptions also create precedents and raise expectations of further exemptions. Any extension of exemptions has to respect the importance of the ratings system to local government funding and the established valuation and rating principles that have been developed over a long period of time.

The proposed community sport exemption resolves an anomaly that exists where if a club has a bar, all of its premises become rateable. This issue is of concern to Deputies on all sides of the House and on which we had extensive discussions in the Seanad. As a result of consultation with the Opposition and with stakeholders, we have a better provision than in the original Bill. I thank Members for that constructive engagement.

The proposed change improves the legislation by granting an explicit exemption to community sport facilities and resolves a long-standing anomaly. The extension of the exemption to not-for-profit child care will bring a consistency of approach to a subset of the child care sector while respecting the principle that those who operate with the intention of making a profit, remain rateable.

While I have covered the main changes in the Bill, provision is made for other proposals, many of which are of a technical nature. Section 2 introduces or amends a number of definitions, including defining the regional fisheries board - now Inland Fisheries Ireland - as a rating authority so as to allow for its revaluation and which is not possible under the 2001 Act. The linking of the definition of "charitable organisation" to that set out in the Charities Act 2009, and amending the definition of material change of circumstances to provide that a change in the licensed status of a premises, will qualify a property for a revision of its valuation. Sections 7 and 13, outline the position of the Commissioner of Valuation in relation to maintaining correctness, equity and uniformity in the valuation list. Section 7 sets out technical amendments relating to valuation orders. Section 10 will enable the correction of clerical errors in the revaluation list without the parties needing to go through the revision process. This is a common-sense provision. Based on practical experience, section 11 augments the provision governing the revaluation representation phase, including making allowance for events that impact on a valuation such as the subdivision of a property or the amalgamation of two properties.

Section 17 will prevent a person from using information they failed to provide in response to a formal notice to ground or support an appeal. Section 26 amends the definition of "net annual value" to return it to its original intended meaning. Section 27 provides for an adjustment to the valuation of a property, if determined using the contractor’s method, to better ensure that the valuation satisfies the objective of being correct, equitable and uniform. Section 28 addresses anomalies within the current legislative system which provides for the global valuation of public utility undertakings. Section 36 will provide for data sharing to improve the efficiency of the valuation process. Section 37 will give greater flexibility and operational efficiency to the Valuation Tribunal by allowing for an individual member of the tribunal to consider an appeal - at present a division must be comprised of three members - and will provide for the consideration of an appeal on the written submissions received without the need for an oral hearing.

Other technical amendments on valuing properties, separating the publication date of valuation lists and the date on which they become effective, consequential changes to the rates limitation order provision and amendments to the definition of "plant" are provided for in sections 6, 8, 9, 30 and 39.

There are also transitional provisions to cater for cases that will be in the system when the Bill is enacted. The basic principle is that if any substantial decision has been taken under the existing legislation then the existing legislation will apply until that case is concluded.

Unrelated to valuation, section 31 of the Bill provides for a new Part 12A which removes any doubt about property transferring from the Minister for Finance to the Minister for Public Expenditure and Reform. This was provided for in secondary legislation but it was advised, to avoid any doubt about the transfer of a limited category of properties, that a provision in primary legislation should be made. I am using this legislation as an opportunity to do so.

This is important legislation. Its provisions will facilitate the acceleration of the national revaluation programme, something which has been long overdue and which has been a matter of priority for the Government. It updates the legislation to provide for deficiencies identified through practical experience. It provides for efficiencies in the appeals process and in the operation of the Valuation Tribunal itself, and it makes minor extensions to exemptions from rates which correct anomalies and bring greater equity to small subsets of the commercial rates base. I commend the Bill to the House.

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