Retailers receive unfair commercial rates increases in 2018

Tuesday, 31 October 2017
Retail Ireland, the Ibec group that represents the sector, today expressed serious concern about an impending spike in the commercial rates bill for many retailers arising from the ongoing revaluation of commercial properties by the Valuations Office. New research carried out on behalf of Retail Ireland on the recently completed national commercial property valuation programme, ‘Reval 2017’, highlights that the majority of retailers are facing substantial and unforeseen increases to their rates bills for the forthcoming year. In some local authority areas, close to 60% of retailers will see increases in their rates bills.
Thomas Burke, Director of Retail Ireland stated: “This data shows that there has been, and continues to be, a significant shift of the rates burden towards the retail sector through this revaluations process. It appears that retailers are outside of the reported claims that 60% of businesses will see a rates reduction following revaluation. It is the opposite in fact, with far more losing out. This clearly shows that the retail sector is being targeted to allow discounts to be applied to other sectors.”

Key findings from research on the revaluation process in Kilkenny, South Dublin and Westmeath include:

    In 2018, 14,500 retailers across the three local authority areas will be liable to pay €37 million or 25% of total commercial rates bill charged.

    Businesses in South Dublin account for 52% approximately of the total local authority income, with the retail sector alone accounting for 12% of the total council’s budget; this is not sustainable.

    The total rates paid by the retail sector across these three local authorities is greater than the commercial rates collected by 21 individual local authorities.

    Retailers in South Dublin pay €28 million in commercial rates, which is as much as all businesses in neighbouring Wicklow combined.

    The average commercial rates bill for shops and other retail in Westmeath will be €7,000 or 75% higher than the county average (€3,900) for all other businesses.

    The trend of 60:40 “winners and losers” does not apply to the retail sector, with an average of 55% of shops in the three local authority areas losing out - Kilkenny (54%), South Dublin (56%) and Westmeath (56%).

Mr Burke continued: “Retailers are increasingly paying a greater share of the total commercial rates bill, a position which threatens to undermine the competitiveness of the sector and places jobs and future investment in danger. The contribution from the retail sector in Kilkenny, Westmeath and South Dublin is greater than the commercial rates income of 21 local authorities. In South Dublin, for example, retailers contribute €28 million in commercial rates, which is 12% of the total local authority annual budget. It also the same amount that all businesses, including shops, in neighbouring Wicklow pay each year.

“Our analysis shows that retailers in the South Dublin, Kilkenny & Westmeath local authority areas are shouldering an unfair share of commercial rates increases. This is simply not sustainable for a sector where cost recovery remains virtually impossible due to continually falling prices and growing market competition. Much of the reason for this increase in retailers’ rates bills arises from the link between commercial property valuations, rising retail rents, and our archaic upward only rent review system. The current model of levying local authority rates is not fit for purpose and requires a radical overhaul.

“We call on Government to urgently begin a process to review the impact commercial rates are having on local businesses, and to begin a meaningful discussion with affected parties about how the current broken system can be reformed to ensure retailers don’t continue to shoulder an unfair and undue burden”.