Maurice Quinlivan (Limerick City, Sinn Fein)
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124. To ask the Tánaiste and Minister for Justice and Equality the details of the criteria used by the Valuation Office to calculate the value of properties for commercial rates. [25517/17]

Maurice Quinlivan (Limerick City, Sinn Fein)
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125. To ask the Tánaiste and Minister for Justice and Equality the details of the types of enterprises and the types of commercial and industrial properties exempt from paying commercial rates. [25518/17]

Frances Fitzgerald (Dublin Mid West, Fine Gael)
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I propose to take Questions Nos. 124 and 125 together.

I can inform the Deputy that while the Valuation Office came within the aegis of my Department from 1 January 2016, the Commissioner of Valuation is independent in the exercise of his functions under the Valuation Acts 2001-2015. The making of valuations for rating purposes is his sole responsibility. I, as Minister for Justice and Equality, have no functions in this regard.

A valuation for commercial rates purposes is an estimate of the Net Annual Value (NAV) of a property, at a specified valuation date, on the assumption that the occupier is responsible for the payment of commercial rates and for insuring and maintaining the property. The term "net annual value" has a legal definition set out in Section 48 of the Valuation Act 2001 as the rent for which, one year with another, the property might, in its actual state, be reasonably expected to let from year to year, on the assumption that the probable average annual cost of repairs, insurance and other expenses (if any) that would be necessary to maintain the property in that state, and all rates and other taxes payable in respect of the property, are borne by the tenant.

Estimating the NAV of a rateable property is an evidence-based exercise. In this regard, I am advised that the Valuation Office assesses relevant market transactions including details of various rental transactions. In accordance with the valuation legislation, best practice internationally and well-established valuation principles and case law arising from the independent Valuation Tribunal and the higher Courts, various valuation methodologies may be used in assessing the evidence available to the Valuation Office in order to arrive at the NAV of a rateable property. The most common method used is the "comparison" method which, as the name implies, employs direct comparison with other similar properties. In the absence of direct comparative evidence of value, two other methods may be used. The first of these is what is known as the "receipts and expenditure" method of valuation where trading accounts are analysed to arrive at the rent which a hypothetical tenant might be reasonably expected to expend on the property. This method is used in particular to value certain classes of properties such as licensed premises, hotels and service stations by reference to the trading data associated with the particular property. Another method of valuation used from time to time, depending on the particular circumstances and type of property involved, is the "contractor's method", where the notional cost of construction, allowing for depreciation as appropriate, and the value of the site are used to arrive at the net annual value. This is provided for in Section 50 of the Valuation Act 2001, as amended.

With regard to the issue of exemptions from rates, the basic premise of valuation legislation is that all buildings and land used or developed for any purpose, including constructions affixed thereto, are rateable unless expressly exempted under Schedule 4 of the Valuation Act 2001, as amended by the Valuation (Amendment) Act, 2015. There is a specific list of 22 property types across a wide range of usages which are exempt from rates under Schedule 4, where they are described in detail. I am advised by the Commissioner of Valuation that these categories have also been the subject of interpretation through cases before the independent Valuation Tribunal and the Higher Courts.