Rate refunds on vacant buildings are costing the Galway City Council an estimated €2 million a year and are proving a hindrance to both the establishment of new businesses and rent reductions.
Following numerous requests to the Department of the Environment over the last number of years, the current Environment Minister Phil Hogan has agreed to meet city councillors to discuss the issue. The meeting takes place in Leinster House on Tuesday November 13.
While any change to the current situation will not suit some landlords, councillors are anxious the issue be resolved ahead of next month’s Budget meeting as it could free up as much as €2 million for services through any extra rate payments during 2013.
The meeting was requested by Fine Gael city councillor Pádraig Conneely who believes it could help see new businesses in Galway and encourage landlords to be more willing to negotiate rents.
An anomaly in the 1946 Local Government Act sees landlords of vacant buildings in Galway not having to pay rates. Instead the rate must be supplied by City Hall. Since the recession this has come as a major drain on the council’s already scant resources.
The situation is in contrast to all other cities in the State, most notably Limerick and Cork. Their city councils grant only 50 per cent refunds under their managerial acts, both of which predate the 1946 Local Government Act.
In effect this means landlords pay full rates when a building is occupied and a 50 per cent rate when it is vacant.
In 2010 City Hall wrote to the department calling for “uniformity across local authorities in the administration of rates”. It said such a move would allow the council to “reduce the rates rebate to 50 per cent and positively encourage increased trade in the city”.
It is understood no new legislation is required to rectify the situation and that a ministerial order would be enough to bring Galway in line with other cites.
Speaking to the Galway Advertiser, Cllr Conneely pointed out that the current situation is “not equitable and bad for business”.
“If I have a property that is vacant and somebody comes to me wanting to open a business there, I can say the rent is €1,000,” he said. “They say they can’t afford it, what about €600? However there is no incentive for me to take them on as under the current law I do not have to pay.
“If this situation is resolved, I would be liable for half the rates and if someone came along offering €500 or €650 then I would take them or be willing to do a deal to help cover the bulk of the rates cost. So getting this sorted will be better for encouraging negotiation on rents and in helping businesses get started.”
Cllr Conneely said he cannot predict the outcome of the meeting but that he will be asking the Minister why Galway is “not treated the same as other cities”.
“A positive response on this issue will encourage landlords to look at how they rent property,” he said, “and encourage letting of premises to businesses. It is always better to have a business working than have a vacant building.”
