Written answers

Tuesday, 20 June 2017

Department of Justice and Equality

Valuation Office

Photo of Danny Healy-RaeDanny Healy-Rae (Kerry, Independent)
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906. To ask the Tánaiste and Minister for Justice and Equality the reason petrol stations are being revalued at an increase of 400%; the further reason the forecourts of petrol stations are being valued at four times higher than the forecourts of other stores; and if he will make a statement on the matter. [28539/17]

Photo of Charles FlanaganCharles Flanagan (Laois, Fine Gael)
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I can inform the Deputy that the Commissioner of Valuation is independent in carrying out his functions under the Valuation Acts 2001 to 2015 and I, as Minister for Justice and Equality, have no role in this regard.

Having a modern valuation base is very important for the levying of commercial rates on a fair and equitable basis across all economic sectors including commercial units selling petrol. This has been the policy of successive Governments for many years and is the express purpose of the National Revaluation Programme now being rolled out by the Valuation Office. The revaluation provisions in the Valuation Acts 2001-2015 provide for the revaluation of all rateable property within a rating authority area so as to reflect changes in value due to economic factors, differential movements in property values or other external factors such as infrastructural changes in the vicinity of a property and changes in the local business environment. The National Revaluation Programme is the first revaluation of all rating authority areas in over 150 years and is being conducted across the country on a phased basis. This is a welcome development which is long overdue and on which considerable progress has been made. Revaluation is an important instrument in redressing historical anomalies in relation to commercial rates for both urban and rural properties and between particular classes of property within a local authority area.

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 and is 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 informed that the Valuation Office analyses relevant market rental transactions for all rateable properties including filling stations in accordance with the legislation, best practice internationally, well-established valuation principles and case law arising from the independent Valuation Tribunal and the higher Courts and the conclusion drawn from that analysis is applied to similarly circumstanced property using the “comparative” method of valuation which, as the name implies, employs direct comparison with other similar properties.

While some Proposed Valuation Certificates issued as part of REVAL 2017 may contain significant increases in the valuations of various property types, including petrol stations and their forecourts, possible reasons for such increases where they occur would be that the valuation of some of these properties had not been revised to take account of improvements, extensions or extensive refurbishment that was not reflected in the valuation immediately before the revaluation that is now in train. I am advised by the Commissioner of Valuation that the general outcome of the revaluations conducted to date by the Valuation Office has been that about 60% of ratepayers have had their liability for rates reduced following a revaluation and about 40% had an increase, a pattern which is most welcome and is expected to be replicated elsewhere as the programme advances.

The current phase of the national revaluation programme (known as “REVAL 2017”) covers the revaluation of all rateable properties in counties Longford, Leitrim, Roscommon, Westmeath, Offaly, Kildare, Sligo, Carlow and Kilkenny where a revaluation is being undertaken for the first time since the nineteenth century. It also includes the second revaluation of the South Dublin County Council area. Revaluation in these counties is expected to be completed in September 2017 and become effective for rating purposes from 2018 onwards. The Commissioner’s intention is then to extend the revaluation programme to other counties.

Following revaluation there is a much closer and uniform relationship between contemporary rental values of all rateable properties in a local authority area and their respective commercial rates liabilities. In essence, the exercise aims to ensure that each ratepayer bears a fair share of the rates burden relative to the modern rental value of the property that they occupy. This applies to service stations as it does to hotels, retail outlets and all other categories of property. A key element of revaluation is to remove anomalies in the system where they exist and establish fair and equitable relativities between the various property classifications. Having regard to the revaluations conducted to date it would be expected that the majority of small businesses in rural Ireland will see their rates liability decrease following a revaluation.

There is an extensive process to cater for ratepayers who are dissatisfied with the proposed valuations they receive from the Valuation Office. In this regard, a dissatisfied person can make representations to the Valuation Office within 40 days of the date of issue to them of the certificate of the proposed valuation. The Valuation Office will consider the representations and may or may not change the proposed valuation depending on the circumstances of each individual property. If any ratepayer is still dissatisfied with the final valuation to be placed on their property following consideration of the representations, they have a right to lodge a formal appeal with the Valuation Tribunal, which is an independent statutory body established for the purpose of hearing appeals against decisions of the Commissioner of Valuation.

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