Rating Policy - Recent developments

Minister Announces 2015 Non-Domestic Revaluation

On 5 April 2012 the Northern Ireland Executive agreed that preparations should be put in place to undertake a revaluation of non-domestic properties in Northern Ireland in 2015, aligning with the rest of the UK. Revaluations of non-domestic property are also scheduled to take place in England, Scotland, and Wales in 2015.

Business rates are a long established local property tax levied on all non-domestic ratepayers, proportionate to the individual rental value of each property.  It is necessary, therefore, to revalue periodically the entire stock of non-domestic property.

There are around 72,500 non-domestic properties in Northern Ireland. Non-domestic rates currently contribute around £550 million a year towards regional services (roads, hospitals, schools, etc.) and local services provided by District Councils.

Those areas and business sectors that have fared better than others over the period since the last Revaluation will face higher rate bills from April 2015, despite the fact that values have declined across the board since the downturn.

Business premises that have experienced rental value decreases more than the average will pay less following a revaluation and vice versa.

Many will find their rate bills not changing much.  The last time a general revaluation took place in 2003 almost three quarters of business ratepayers’ rates bill went up or down by less than 20%.

Land & Property Services will shortly begin the work to assemble the evidence and begin the process of revaluing non-domestic properties in Northern Ireland

Revaluations are a regular feature of the business rates system, and make sure that liability for rates is fairly spread across all sectors in line with up to date rental values

Evaluation of Pensioner Deferment Scheme

The rates deferment scheme was introduced in April 2010 to provide a further payment choice for owner occupier pensioners. An evaluation of the scheme's effectiveness has been undertaken examining whether it represents value for money.  This highlighted that low take-up of the scheme has meant that it is not as effective in providing a payment choice to pensioners, as had been hoped.

As a result the scheme is to be closed.  Applications to the rates deferment scheme will continue to be accepted until 31 March 2012. Those already deferring rates will be fully protected, as well as those who enter into a deferment agreement before 1 October 2012.

Evaluation_of_Pensioner_Deferment_Scheme.pdf

Rates (Amendment) Bill

The Finance Minister has introduced a Rates (Amendment) Bill to give effect to a range of measures contained in the Commercial Rating Way Forward report.

A copy of the Bill and associated Explanatory and Financial Memorandum can be found at:

http://www.niassembly.gov.uk/Assembly-Business/Legislation/Primary-Legislation/NIA-Bill-211-15-Rates-Amendment-Bill/

Commercial Rating Way Forward Report

The Finance Minister Sammy Wilson, MP, MLA, has now published a way forward report on the rating of commercial property.

The paper includes an overview of the key decisions reached in relation to:-

• a large retail levy;
• expansion of the small business rate relief scheme;
• not charging occupied rates on non-commercial window displays in empty retail premises;
• 50% relief for 12 months for the first occupier of long-term empty retail premises (unoccupied for a year or more) in 2012/13.

The full report can be accessed below

Way Forward Report (pdf - 241KB)

Commercial Rating Consultation Outcomes Report

The Finance Minister Sammy Wilson, MP, MLA, has now published a consultation outcomes report. The consultation report provides an overview of the consultation outcomes.

The foreword to the consultation report outlines, in very broad terms, the Minister’s current thinking. However, the Minister will not be making final decisions, or recommendations to the Executive, until he has considered the views of the Assembly’s Finance and Personnel Committee, which is due to hold evidence sessions during November and report back in early December.

Following this the Executive will be advised on the way forward and asked to agree both the final policy position and the necessary legislation to give effect to this. A paper setting out the way forward will be published shortly afterwards and will also be made available on the Rating Review website. The agreed changes would be effective from 1 April 2012.

The report is available below

Commercial Rating Consultation Outcomes Report (pdf - 278KB)

Consultation on the Rating of Commercial Properties

The Department of Finance and Personnel launched a consultation exercise, on 28 June, to seek views on changes to the rating of commercial properties. This was aimed at rebalancing the rating system during a period of economic downturn through to recovery.

The views of interested individuals and organisations were sought on:

• extending the reach of the small business rate relief scheme;
• paying for this extension by introducing a levy on the largest/highest value retail properties;
• allowing the use of window displays in empty shops for non-commercial purposes whilst preserving 50% empty property relief (or any exclusion); and
• clarifying the legislation relating to valuation assumptions for the next revaluation in 2015.

The consultation closed on Tuesday 18 October 2011. Responses to the consultation can be accessed via the link below:

http://www.dfpni.gov.uk/rating-review/index/rating_of_commercial_properties_consultation.htm

Closure of Energy Efficiency and Low Carbon Homes Schemes

The Executive agreed to close both the energy efficiency and low carbon homes schemes from 31 March 2011. The savings associated with closure of the schemes will be transferred into funding of the Green New Deal.  

The energy efficiency homes scheme provided a one-off rebate where loft or cavity wall insulation was installed. Application forms will not be issued after 31 March 2011 and all completed applications must be received by 30 June 2011.

The low carbon homes scheme provided a full rebate from rates (for up to two or five years) for those qualifying for the low carbon homes scheme. Given concerns from those that are in the process of building low or zero carbon properties first occupiers will still be able to qualify for the two of five year rates holiday for a limited time, where certain conditions are met. An application for planning permission must be made by 31 March 2011 and a completed low carbon homes application lodged with Land & Property Services by 31 March 2012. The property must be completed and occupied by that date and meet the necessary low or zero carbon standards.

Rating of Empty Homes from 1 October 2011

The Executive first announced its decision to introduce the rating of empty homes in 2007. Following this, consultation on the detailed policy measure was undertaken between May and August 2008 and the way forward subsequently set out in a consultation report in 2009.

Originally timetabled for introduction in April 2010, the Minister took the decision in September 2009 that the rating of empty homes at 100% would not be introduced in April 2010, being postponed until 2011 with the situation to be kept under review.

Having taken account of the position of the housing market the Minister announced on 29 June 2010 that the rating of empty homes  would be introduced from 1 October 2011. This will provide those holding empty properties with time to prepare for the new charge, or get the home in question occupied. In addition for unsold houses that are already built and those that are completed in the next financial year, the will be an 18 month initial exemption.This exemption will be reduced to 12 months for subsequent years.

Certain empty homes will be excluded from rates, including where:-

• the empty home has a capital value of below £20,000;
• occupation is legally prohibited or by government action;
• where the  person entitled to possession is receiving care;
• the property is empty due to imprisonment or the owner’s death (probate);

Cancellation of Non-Domestic Revaluation

On 25 May 2010 the Finance Minister Sammy Wilson announced his decision not to proceed with the revaluation of non domestic properties, planned for April 2011.

The revaluation had originally been due to take effect in April 2010. However it was postponed given instability in the local commercial property market and to allow time for the market to recover.

The decision to cancel the revaluation was informed by analysis of the commercial property market This showed that there was insufficient market evidence to establish a reliable new Valuation List of non domestic properties.

That analysis also suggested that, if the revaluation proceeded, it would fall well short of international valuation standards.

In order to avoid any further uncertainty, the next revaluation will now take place in April 2015. This decision will allow Northern Ireland to align with the next revaluation of non domestic properties in the rest of the UK, which is due to occur then.

Evaluation of Non-Domestic Vacant Rating

In 2009, the Department carried out an evaluation of the policy of rating vacant commercial premises. This was a planned evaluation, given that it was five years since the policy had been put in place.

The report presented the results of this evaluation process, part of which included a targeted consultation exercise with key stakeholders in order to determine their views on the impact and effectiveness of the policy.

As a result of the reports findings the Minister decided to:-

• retain empty property rate relief at 50%;
• retain the exclusions available in respect of the policy; and
• add a further exclusion for companies in administration.

Regulations giving effect to the further exclusion were made on 18 February 2010 and came into operation on 1st April 2010. A copy of the regulations can be found on the OPSI website

http://www.opsi.gov.uk/sr/sr2010/nisr_20100037_en_1

Rates (amendment) Act (Northern Ireland) 2009

The Rates (Amendment) Act (Northern Ireland) 2009 received Royal Assent on 3 November 2009 and gives effect to high level policy decisions that were agreed to by the Executive in late 2007 and which were consulted on during 2008. The Act also provides for some additional measures and amendments in relation to the non domestic sector.

A full version of the Act (to amend the Rates (Northern Ireland) Order 1977) and explanatory notes to accompany the Act can be found at the OPSI website http://www.opsi.gov.uk/legislation/northernireland/acts/ni-acts2009a

Small Premises Rate Relief Scheme for Business

It was announced on 15 December 2008 that a small premises rate relief scheme for business would be introduced for Northern Ireland.

Subordinate legislation was prepared under the new powers created through the Rates (Amendment) Act (Northern Ireland) 2009, and this came into operation on 1 April 2010.

Fact Sheets on the main scheme(161KB) and the enhancement for Post Offices(155KB) were distributed to key stakeholders explaining the scheme in more detail.