CommercialRates:The next phase in a national programme to revalue all commercial property in Ireland is underway. The Valuation Office has begun assessing properties in the Fingal County Council area.

Announced last week, this is the second Dublin council area to undergo revaluation under the new provisions in the Valuation Act 2001. Work began in the South Dublin County Council area in 2005, but in time the entire national commercial property holding - some 150,000 properties and counting - will undergo revaluation for rates purposes, said the managing valuer in the Valuation Office, Declan Lavelle.

The idea is to bring more equity, fairness and transparency into the local authority rating system, Lavelle said.

"The value of property can change over time. It is important to upgrade valuations as much as possible to get equity into the system."

He points to the inequities that have arisen over the past few years in the rent returns experienced by retail versus industrial commercial holdings. Retail rents have raced upwards while the past few years have seen industrials in the doldrums.

The statutory basis for revaluation comes under the Valuation Act 2001, which established the office, created a commissioner of valuation (currently Aidan Murray), and introduced a process for revaluation.

The goal is to build a much closer and uniform relationship between the current rental values of property and the applicable commercial rates liability.

There are three elements to the process, Lavelle explained. It starts with the collection of key data by valuers, continues with the evaluation of this data and concludes with the creation of a new valuation for the property. There are two chances to challenge the set valuation, first via the Valuation Tribunal set up under the Act and then a right of appeal to the High Court and ultimately the Supreme Court if a point of law is at issue.

The Act and its provisions replace the previous practice of setting the valuation on a property by looking at rental values established in 1988.

The current revaluation process is not a first, Lavelle pointed out. The only previous valuation of all property in Ireland was carried out between 1852 and 1865.

It is a monumental task to co-ordinate and accomplish such a comprehensive revaluation.

"It is a huge project," Lavelle said. "It is a serious challenge but things are going well. There is also a learning element because we are developing in-house IT systems."

The idea is to have all commercial property rates valuations available in electronic form. "That is the way we are heading, it is the only way to go," Lavelle said.

Rates are not a small financial issue, despite the fact that neither residential property nor agricultural lands are affected by rates or revaluation. Rates delivered €1.2 billion to local authorities last year. New properties coming into the rates system built last year accounted for €50 million alone, Lavelle said.

Dublin is the focus of attention in the short term, he said. "We are staying in Dublin for the foreseeable future. With south Dublin we have almost all the field work done and the valuations made." The office is now working with occupiers on their rights of appeal.

"Where we will go after that is uncertain," said Lavelle. "We might do a rural location to get a bigger picture. The rural centres will generally be much smaller."

The valuations have always been a part of commercial property ownership and the annual striking of rates by the councils is often a fraught undertaking that sometimes leads to threats of ministerial intervention.

The new legislation has not changed that, Lavelle said. "Revaluations are done on a regular basis. We continually update the list as properties are developed and extended."

For this reason the 150 staff at the Valuation Office are either engaged in maintaining existing lists or are part of the big national revaluation process. "Rates are a tax on the occupier of the property, not on ownership of the property," Lavelle said.

The valuation of a property is based on its annual rental value, basically the amount of rental income it generates. This is multiplied by the annual rate on valuation, the rate struck each year by the councils. The resultant figure is the amount of commercial rates payable in a given year.

Revaluation will lead to a redistribution of the commercial rates burden between ratepayers depending on the relative shift in rental values between locations and categories of properties, Lavelle said.

Importantly, revaluation will not increase the total amount of commercial rates collected by Fingal County Council or any other local authority, the Valuation Office states. The commercial rates income of the local authority will be capped in the year following a revaluation.

More information is available from the Valuation Office's website on www.valoff.ie.