Local authorities may be losing tens of millions of euro due to backlog in rates revaluation

Commercial rates, which are levied on commercial and industrial properties, provide about 26% of all income for local authorities and generated revenue of €1.7bn in 2022. File picture: Larry Cummins

Delays in processing applications for the revision of valuations of commercial properties could be costing local authorities tens of millions of euro in revenue from rates every year, according to the local government spending watchdog.

A new report by the Local Government Audit Service (LGAS) warned the country’s 31 city and county councils are losing potential income if applications to revise valuations on rateable properties are not decided in the same year as they are submitted.

The LGAS report revealed there were over 5,500 cases outstanding in August 2023, with almost half of all applications taking in excess of 12 months to be decided.

One application for a revision of the valuation of a boutique guesthouse was first submitted in 2012.

The report also revealed 46% of outstanding cases relate to new commercial properties which have never been levied for any rates, unlike older premises.

The LGAS noted it was estimated in 2020 that a waiting list of 11,825 cases had resulted in a loss of rates income of €45.8m.

Commercial rates, which are levied on commercial and industrial properties, provide about 26% of all income for local authorities and generated revenue of €1.7bn in 2022.

The LGAS report noted councils warned the loss of income from delays in the revision programme by Tailte Éireann (formerly the Valuation Office) has a financial impact on local government funding and the provision of services, especially as valuations and thereby commercial rates cannot be applied retrospectively.

They claimed delays could also lead to inconsistencies between the valuations of properties which can result in inequality and consequent negative engagement with ratepayers.

The LGAS report predicted a backlog would remain in the system despite 3,800 cases being due to be finalised during 2023.

According to the report, the processing of more than 8,200 revision applications by Tailte Éireann in 2022 resulted in over €33.4m in revenue for local authorities that year.

However, some 6,000 of those applications had been dealt with on a one-off basis by an external valuer to address a large backlog of cases.

The report revealed there were already 7,430 outstanding cases at the start of 2023, although the figure had been reduced by almost 2,000 by mid-August.

Among the local authorities with the largest backlog of cases with Tailte Éireann in August were Dublin City Council (940), Cork County Council (665) and Meath County Council (282).

Revaluation programme

A major revaluation programme of over 150,000 rateable properties across the Republic has been under way since 2005 to ensure valuations are based on updated rental market values.

The programme, which is being overseen by Tailte Éireann, is due to be completed in 2025.

Revisions are considered appeals of the rateable value of properties due to material changes to premises, such as extensions, amalgamations, delistings as well as setting rates for new commercial properties.

Abour nine out of every 10 revision applications to Tailte Éireann are submitted by local authorities.

However, valuations determined by Tailte Éireann can be appealed by the ratepayer to the Valuation Tribunal.

The report shows Tailte Éireann has processed 20,160 revision applications between 2020 and 2022, with the annual number of cases increasing by about 80% over the period.