There have been significant changes made to Commercial Rates legislation by virtue of the Historic and Archaeological Heritage and Miscellaneous Provisions Act 2023 (the “2023 Act”), which has amended Sections 1-22 and 27 of the Local Government Rates and Other Matters Act 2019 (the “2019 Act”). These changes have been in force since 1st January 2024.
What’s New?
The 2023 Act, amending the 2019 Act has, among other things, introduced the following key provisions:
- Introduction and Definition of a “Liable Person”
Section 263 of the 2023 Act amends Section 4 of the 2019 Act and introduces the concept of a ‘Liable Person’ and defines them as the person in occupation or entitled to be in occupation of a Relevant Property on the first day of the financial year.
- New Notification Requirements
Local Authorities are obliged to maintain rates databases, to include the name of the Liable Person and the address of the Relevant Property. Changes to the particulars in the rates database should be notified to the local authority by the Liable Person within 10 days of that change. Examples of such changes include where:
What’s New?
The 2023 Act, amending the 2019 Act has, among other things, introduced the following key provisions:
- Introduction and Definition of a “Liable Person”
Section 263 of the 2023 Act amends Section 4 of the 2019 Act and introduces the concept of a ‘Liable Person’ and defines them as the person in occupation or entitled to be in occupation of a Relevant Property on the first day of the financial year.
- New Notification Requirements
Local Authorities are obliged to maintain rates databases, to include the name of the Liable Person and the address of the Relevant Property. Changes to the particulars in the rates database should be notified to the local authority by the Liable Person within 10 days of that change. Examples of such changes include where:
- Person ceases to be a Liable Person.
- Person becomes the Liable Person.
- Liable Person moves from being an occupier to being the person entitled to occupy.
- Liable Person moves from being entitled to occupy to being the occupant.
A transaction relating to a Relevant Property may give require dual notification to the local authority. Examples of who should notify the Local Authority are listed below:
- Obligation to pay rates
The Liable Person will be obliged to discharge any outstanding rates attached to the property prior to the completion of a sale of that property. Failure to pay rates before completion of a sale is now a criminal offence. This means that commitments to pay outstanding rates from sale proceeds after completion will no longer be possible. The purchaser and vendor of the property may still wish to apportion the financial year’s liability as between them, so long as the rates themselves are discharged prior to completion of the sale.
Failure by an owner/liable person to pay rates will trigger a statutory charge on the property which continues to apply without a time limit until the rates are paid in full.
Any charge for unpaid rates falls away on the sale of the property, so there are no consequences for a purchaser if the vendor defaults on its obligation to pay rates before completion. Unpaid rates remain a personal liability of the vendor.
- Rates Statement
The local authority is obliged to provide a statement of rates within 10 days of request of same from the Liable Person.
- Vacant Property Abatement Scheme
Non-payment of rates by an owner / liable person triggers a statutory charge on the property until the rates are fully paid. In cases of partial vacancy or seasonal vacancies, the 2024 rates bill remains payable in full. Local authorities are empowered to create schemes for abating rates on vacant properties, with the abatement level set individually by each authority.
- Interest on unpaid rates
Interest on unpaid rates will accrue at the rate of 0.0219% per day (8% per year)
Conclusion
The new rates regime should be broadly welcomed by both landlords and tenants alike, as landlords may sell a property without the requirement to discharge rates, imposed under the new regime, which are unpaid by occupiers (i.e the sitting tenant). Likewise, a tenant will only be responsible for the commercial rates for their own period of liability/occupation.
However, the requirement to discharge arrears before completing a sale, combined with the difficulty regarding the definition of a liable person will likely lead to some vendors needing to engage in short-term borrowing to discharge rates on selling.
Also, the reduction in the abatement of rates on vacant properties may cause landlords to defer taking possession back from tenants for as long as possible, until they have other letting arrangements organised.
Non-compliance with the new amendments or failure to discharge outstanding rates and interest for which they are liable before the completion of a sale carries stringent penalties, including summary conviction, a €5,000 fine, and/or imprisonment for up to six months. Therefore, it is imperative for any party affected by the new amendments to take legal advice.
For further information on this topic or for any other property related queries please contact a member of OSM Partners LLP’s Property team.
| Transaction | Who must notify |
| Sale of vacant premises | Vendor Purchaser |
| Sale of a partly let premises | Vendor Purchaser in respect of the unlet parts of the premises |
| Owner vacates and leaves premises vacant | |
| Owner | |
| Owner moves into vacant premises | |
| Grant of lease | |
| Landlord Tenant | |
| Forfeiture of lease | |
| Assignment of lease | Tenant Asignee |
The Liable Person will be obliged to discharge any outstanding rates attached to the property prior to the completion of a sale of that property. Failure to pay rates before completion of a sale is now a criminal offence. This means that commitments to pay outstanding rates from sale proceeds after completion will no longer be possible. The purchaser and vendor of the property may still wish to apportion the financial year’s liability as between them, so long as the rates themselves are discharged prior to completion of the sale.
Failure by an owner/liable person to pay rates will trigger a statutory charge on the property which continues to apply without a time limit until the rates are paid in full.
Any charge for unpaid rates falls away on the sale of the property, so there are no consequences for a purchaser if the vendor defaults on its obligation to pay rates before completion. Unpaid rates remain a personal liability of the vendor.
- Rates Statement
The local authority is obliged to provide a statement of rates within 10 days of request of same from the Liable Person.
- Vacant Property Abatement Scheme
Non-payment of rates by an owner / liable person triggers a statutory charge on the property until the rates are fully paid. In cases of partial vacancy or seasonal vacancies, the 2024 rates bill remains payable in full. Local authorities are empowered to create schemes for abating rates on vacant properties, with the abatement level set individually by each authority.
- Interest on unpaid rates
Interest on unpaid rates will accrue at the rate of 0.0219% per day (8% per year)
Conclusion
The new rates regime should be broadly welcomed by both landlords and tenants alike, as landlords may sell a property without the requirement to discharge rates, imposed under the new regime, which are unpaid by occupiers (i.e the sitting tenant). Likewise, a tenant will only be responsible for the commercial rates for their own period of liability/occupation.
However, the requirement to discharge arrears before completing a sale, combined with the difficulty regarding the definition of a liable person will likely lead to some vendors needing to engage in short-term borrowing to discharge rates on selling.
Also, the reduction in the abatement of rates on vacant properties may cause landlords to defer taking possession back from tenants for as long as possible, until they have other letting arrangements organised.
Non-compliance with the new amendments or failure to discharge outstanding rates and interest for which they are liable before the completion of a sale carries stringent penalties, including summary conviction, a €5,000 fine, and/or imprisonment for up to six months. Therefore, it is imperative for any party affected by the new amendments to take legal advice.
For further information on this topic or for any other property related queries please contact a member of OSM Partners LLP’s Property team.
