The Demise of Vacant Rates Relief
Local authorities across the country have been historically dependent on commercial rates for a significant proportion of their yearly income. It is estimated that commercial rates are worth approximately €1.5 billion annually to the local government sector. As of 2019 the Department of Housing, Local Government and Heritage reported that rates income typically represents between 20% to 30% of local authority income. The highest proportion was derived in Fingal County Council with rates revenue representing 52% of total income for that year. The proportion of rates income to total revenue is likely to increase further with the move by some local authorities to substantially reduce the vacancy credit available to owners of unoccupied commercial properties.
Since 2017 the vacancy refund allowable by Dublin City Council has been reduced from 50% to nil, meaning an owner is obliged to pay the entire commercial rates bill attached to a property regardless of whether it is occupied or not. The corresponding vacancy relief available from the other Dublin Local Authorities for the current year are as follows; Fingal 30%, Dun Laoghaire-Rathdown 35% and South Dublin 50%.
For properties situated outside the main urban local authority areas landlords typically had no commercial rates liability for vacant properties. However, with Carlow County Council opting to reduce the maximum level of vacancy credit available to 50% for 2023, other local authorities across the country may follow suit. This changing landscape should cause owners and investors to closely consider the financial liabilities associated with holding vacant commercial properties. Depending on the nature of the property in question, options which may be open to owners to reduce their liability could include undertaking works to put the property beyond beneficial use or seek a change of planning to residential use.
For more information and advice regarding reducing your commercial rates liability contact Niall Brereton, Director of Professional Services.
Author: Niall Brereton, Director, Bannon
Date: 3rd May 2023
