Worried about the new rates system? George Saurinanswers some key questions

The new rateable valuation system in South Dublin County Council will take effect on January 1st, 2008 South Dublin County Council occupiers will no doubt have some key questions

What effect will the new valuation system have on your commercial rates liability?

The increase in South Dublin County Council's income from rates is capped at the rate of inflation in 2008 (around 5 per cent). There is no cap, however, on the increase in individual occupiers' liabilities.

The redistribution of rates liability will result in some occupiers having a higher rates bill with the possibility of some occupiers securing a reduction.

Why was a new system needed?

The old rating system was deemed inequitable because it does not reflect market conditions as it is based on dated valuation lists and not market evidence. The system is based on values as of November 1st, 1988 to which a multiplier is attributed to arrive at the value.

A good example of how the old system could not keep up with market practice is that of high-spec retail warehousing which did not exist in 1988. Despite this, prime retail parks - such as Westend Retail Park, Blanchardstown, Airside in Swords and The Park, Carrickmines - have all been valued using this antiquated system. As a result, certain types of occupiers are paying a disproportionate amount of rates in relation to their property's value.

How are properties to be valued under the new system?

South Dublin County Council has been selected as the first borough to be valued under the new rating system. The system involves valuing each property based on its net annual value (NAV).

The NAV is defined in 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 and charges (if any) payable by or under any enactment in respect of the property, are borne by the tenant".

In essence, the NAV equates to the annual rent achievable for the property at the revaluation date assuming all repairs, insurance premiums and rates are paid by the occupier.

What is the valuation procedure?

The Valuation Office inspected all rateable properties within South Dublin County Council between 2005 and early 2007 and proposed valuation certificates were issued to occupiers in June 2007. Occupiers had 28 days from the date of the proposed valuation certificates to make representations to the Valuation Office setting out any errors, such as incorrect floor areas and/or providing comparable evidence, to justify a reduction.

Following representation, discussions between the Valuation Office and occupiers' representatives took place, with some reductions being achieved.

Is it too late to appeal my valuation certificate?

Following the representation stage, final valuation certificates will be sent to occupiers around now, with a time frame of 40 days to make an appropriate appeal to the Valuation Office.

Appeals must be lodged with the applicable scale fee which ranges from €60 to €375 depending on the NAV applied to the property.

Under the new system, this fee is refundable should a reduction be achieved. The 40-day time frame for South Dublin County Council includes Christmas, so it is imperative that action be taken immediately by occupiers who wish to appoint a representative as they will only have a short time in which to assess the valuation, inspect the property and if necessary make an appeal.

Can an appeal officers' determination be appealed?

Appeal officers' determinations can be appealed to the Valuation Tribunal, but appeals are expensive and they will be restricted to dealing with legal issues only.

Which borough is to be revalued next?

Valuers from the Valuation Office are inspecting properties in Fingal County Council and proposed valuation certificates are expected to be issued for Fingal County Council in June 2009, with liabilities under the new system becoming effective from January 2010.

George Saurin works in the area of advisory services for Colliers Jackson-Stops