Rates Reform
The Rates (Capital Value) (Northern Ireland) Order 2006 paved the way for a new domestic rating system based on individual capital values from April 2007. The Commissioner of Valuation was empowered to publish the capital value of every domestic property. Ratepayers were given the opportunity to make inquiries and seek an informal review before the system came into operation.
A dwelling-house refers to a property used for private dwelling purposes, including any private garage or storage premises. If a vacant property is used for such a purpose, it may be deemed to fall into that category from the time it begins to be used.
The capital value represents the amount a property would reasonably be sold for in an open market on January 1, 2005, based on specific assumptions. These assumptions include the property being sold with vacant possession, either a fee simple or a 99-year lease in the case of an apartment, free from encumbrances.
It is assumed that the property is in an average state of repair and fit out, considering its age and character. Additionally, there’s an assumption that there is no development potential beyond that for which planning permission is not required. Domestic properties are always assumed to be used for such purposes during valuation.
The Commissioner is empowered to publish the capital values of properties. When a property is used partly as a dwelling house, the value should relate only to the dwelling house part. Other information specified by the Department may also be published.
Total capital values for the District Council area may be published, and revisions to capital or domestic capital values are possible.
There’s an increase in rates remission for amateur sporting organizations, rising to 80%. Additionally, the powers for reducing rates for hardship cases have been increased.
Alongside the Rates (Capital Values) Order, the Rates (Amendment) Order 2006 introduced a range of complementary reforms. These included new rate relief for low-income individuals, full relief on properties occupied by those in full-time training and education, young persons leaving care, individuals under 18, establishment of a new independent valuation tribunal, partial exemption for houses occupied by clergy members, various enabling powers, and further reliefs in the non-domestic sector.
Provision is made for the introduction of capital values in stated NAV (Net Annual Value) in determining rates set by the District Council. A portion of regional rates may be specified for police purposes, subject to the Assembly’s approval.
There are provisions for the revision of capital values on the valuation list and the determination of whether a property is comparable for the purpose of a revision.
The right to pay by instalments is extended to all domestic and non-domestic properties. Schemes are allowed for regulations for the Department to enter into agreements with owner-occupiers of pensionable age to defer rates on property subject to conditions, pending Assembly approval.
The Commissioner of Valuation is tasked with maintaining both a capital value and NAV list. The Commissioner may publish a new valuation list according to the general evaluation determined by the Department. Reasonable steps should be taken by the Commissioner to notify the public of a new valuation list. Both the Department and District Councils are required to allow access to a valuation list, and provisions are made for publicity.
The Assembly may introduce unoccupied rating for the domestic sector, allowing for a 50% reduction in rates payable on unoccupied properties, subject to the Assembly’s approval.
The Department has the power to terminate exemptions for private dwellings by specifying that a new building is completed and reasonably expected to be occupied within three months. In such cases, it may become liable for the unoccupied rate.
The 2004 Order phased out industrial derating and introduced rating for vacant non-domestic property. Industrial derating was phased out as of April 1, 2011, with the phasing-out period subject to change by the Department. The Order imposes rates on unoccupied non-domestic property, applying a general rate of 50%.
The Department is given the authority to require information in cases where premises are unoccupied. Notices may be served on specified persons or bodies requiring them to identify the owner.
The 2009 Act provided for a comprehensive review of the domestic rating system. After the restoration of devolution, it introduced two schemes to encourage householders to be more environmentally responsible. It included the rating of empty homes at 100% and introduced powers for a new rates deferment scheme for pensioners.
The Department of Finance may make regulations allowing for a one-off reduction in rates for owner-occupiers installing loft or cavity wall insulation. This reduction lasts for a specified period. Additionally, the Department has the authority to make regulations allowing for rates relief for the first occupiers of new zero-carbon and new low-carbon homes for five years and two years, respectively.
Rating of empty homes is introduced to encourage letting, allowing them to be rated up to 100%. However, this provision was postponed due to the poor housing market.
The maximum capital value for domestic rating was reduced to £400,000, ensuring a maximum council band rate bill in England of £2,800. Councils are compensated for the introduction of the cap.
Eligibility for the owner-occupier pension scheme applies to persons over 60. The Department may enter into a deferment agreement with the occupier or partner as long as they occupy the property. Specific eligibility conditions apply, including minimum equity levels, considering personal circumstances. Interest applies to the deferred part.
Rating Liability for Manufacture
The 2012 Act provides for a 20% relief to small businesses with a net value between £5,000 and £10,000. This relief is balanced by a levy on larger premises with a rateable value of £500,000 or more, primarily used for the retail sale of goods.
There is provision for an application for rebate of rates by non-domestic hereditament holders. The rebate is up to 50% and applies to previously unoccupied premises of retail properties. It also applies to premises occupied in 2012-2013 after being unoccupied for 12 months or more, provided they were last used for retail purposes or could reasonably have been occupied for this purpose. A 12-month reduction of 50% applies.