Ireland: Real Estate Update: The New Rates Trap

Last Updated: 19 November 2015
Article by Des Rooney and Kevin Hoy

Section 32 of the Local Government Reform Act 2014 ("the 2014 Act") introduces two important amendments to the law. First, it has the effect that assignees of rateable property are no longer automatically liable for rates arrears of the previous tenant and instead, rates must be discharged by the assignor ("the Liability Crystallisation"). Second, it introduces a new notification obligation on an owner of rateable property where there has been a transfer of any interest in that property and imposes a penalty where there is a failure to notify and the rates are not discharged by the assignor ("the Notification Obligation"). These amendments will have a significant impact in the commercial property sector, particularly on landlords and receivers. This article explores the impact of these changes.


Section 32 of the 2014 Act was enacted on 1 July 2014 by SI No 146/14. The overall Act represents an effort to modernise local authorities,1 while Section 32 in particular is widely seen as a measure to boost the commercial property sector.2


The Valuation Act 2001 contains most of the current legislation on rates. For instance, it replaced previous terms such as "hereditaments" and "tenements" with a single term of "relevant property", of which a comprehensive list is provided by Schedule 3 of that Act, while Schedule 4 thereof provides for the exemptions from "relevant property", including charities. The 2014 Act continues the use of the "relevant property" term and Section 32(1) thereof provides that "relevant property" shall be construed in accordance with Schedule 3 of the 2001 Act.

Prior to the enactment of the 2014 Act, subsequent occupiers were liable to pay rates arrears, pursuant to Section 71 of the Poor Relief (Ireland) Act 1838 ("the 1838 Act"), which provided as follows:

"every rate made under the authority of this Act shall be paid to the person authorised to collect the same by the person in the actual occupation of the rateable property at the time of the rate made, and on his default then by the person subsequently in the occupation of the rateable property from whom such rate shall be demanded."


The usual practice was that rates were recoverable from subsequent occupiers in amounts of up to two years' arrears. Section 32(2)(b) now provides that, if there is a pre-existing liability to pay rates on the part of "the person transferring the property being either the occupier or the owner", that person must now pay those rates "at the date of the transfer". Schedule 2 of the 2014 Act also amends a sentence fragment from Section 71 of the Poor Relief (Ireland) Act 1838 to delete "and on his default then by the person subsequently in the occupation of the rateable property from whom such rate shall be demanded".

The Notification Obligation

Section 32(2)(a) provides that the existing owner, where there is a change of rated occupier—whether or not the owner is in occupation or indeed aware of an assignment or its actual date—must provide written notification of the transfer to the rating authority within two weeks of the transfer date. This gives rise to practical problems as an owner landlord is not usually represented at completion of an assignment. Pursuant to Section 32(4), failing discharge of rates and timely notification, the owner becomes "liable for a charge equivalent to no more than two years of the outstanding rates". For an owner-occupier, this liability is in addition to the existing liability to pay rates. The wording—"no more than two years"—suggests that the amount of the charge is discretionary. It may, however, also mean that the charge will amount to all the outstanding rates, provided that these do not exceed two years' arrears. As is considered further below, the ambiguity of this wording is undesirable. It is perhaps also worth noting that Dublin City Council interprets this charge as being a penalty payable by the landlord as owner, regardless of whether the tenant later settles their liability in respect of rates.3

Enforcing the Liability Crystallisation and Notification Obligation

It is also important to note that, where the arrears are owed by the owner—as opposed to a mere occupier—the liability becomes a charge on the property, likewise the penalty. Section 32(3) provides that rates due by an owner "shall remain a charge on the relevant property" which, as against a good-faith purchaser for value, may last for up to 12 years. This applies regardless of whether the owner has provided the notification on time. Section 32(5) deals with the penalty charge, and also provides that the charge will remain a charge on the relevant property, save as against a good-faith purchaser for value after 12 years. These charges are, according to Section 32(6), without prejudice to the right of the rating authority to pursue the previous occupier, with primary liability. Significantly, though, it appears clear that a landlord, giving timely notification, will not become liable for rates that have not been paid by an occupier; nor are such rates capable of becoming a charge on the property.


An "occupier" is defined in Section 32 as "every person in the immediate use or enjoyment of the property". The obligation to pay rates falls on "the person transferring the property being either the occupier or the owner".

It is useful to consider whether this provision has any impact on the position of receivers and liquidators. At common law, the position of receivers and liquidators is that they are agents of a company in rateable occupation and that they are not therefore personally liable for rates, save in certain circumstances. In Ratford v Northavon Rural District Council,4 Slade LJ commented that "any occupation of the relevant premises enjoyed by a receiver will normally be enjoyed by him in his capacity as agent for some other party",5 and this was echoed by Arden J in Brown v City of London,6 who added that occupation as agents for the company in receivership was not sufficient to make receivers occupiers for rating purposes. Guidance as to the circumstances in which receivers will be occupiers is provided by Ratford,7 in which it was held that the company remained in rateable occupation as the terms of the debenture did not oblige possession and they provided that the receivers were to be treated as agents of the company and where it had not been shown that the receivers had dispossessed the property or that the quality of the possession was other than that of an agent.

It is not apparent that Section 32 is tended to displace this usual position. However, clearly, where it will have an impact on receivers and liquidators is where they are selling property; they will no longer be able to follow the current practice whereby rates arrears are dealt with on the basis that the purchaser is liable to pay them.8 The rates due by an owner will now need to be paid before the sale in order to prevent charges being imposed on the property. It is very important, therefore, that receivers and liquidators establish which party is liable to pay rates at the date that a sale is completed, as this will be a new function that will have to be performed before transfer.


Turning to the Notification Obligation, for the purposes of Section 32, an "owner" is defined as a person other than a mortgagee not in possession "who, whether in that person's own right or as trustee or agent for any other person, is entitled to receive the rent of the property or, where the property is not let, would be so entitled if it were so let".

This is a broad definition. Clearly, a landlord will be an "owner", and will be affected by the Notification Obligation and it will be particularly problematic if an assignment or sublease is arranged without his or her knowledge (and therefore he or she has not had a chance to make the notification), becoming personally liable for a charge under Section 32(4) (of an unknown value) if the tenant's rates arrears are unpaid.

However, also affected by the Notification Obligation will be receivers, banks and liquidators who, as already set out above, generally act as agents of the owner company and who are usually entitled to receive the rent of the property, and seem accordingly to be within the meaning of Section 32. They too must be cognisant of the Notification Obligation.


The Liability Crystallisation

As noted above, the aim of the Liability Transfer was to boost the commercial property market; however, it may ultimately deliver mixed results. On the one hand, compliance with the new regime will indeed encourage buyers as they will take property free of the obligation to pay its rates arrears. On the other hand, viewed in its totality, the purchaser's onus under the old regime to pay the rates over two years may have been less burdensome than the administrative obligation on owners (broadly understood) to comply with the Notification Obligation (in particular given the short time frame for notification) and the possibility of both rates and a penalty becoming charges on the property.

It is interesting to note that an amendment was proposed to Section 32 in the Dáil at the second stage to eliminate Section 32(2)-(6), substituting a provision that a Chief Executive might waive the rates due by a subsequent occupier on the basis of submissions put to him or her by the new occupier, if the Chief Executive was "satisfied, based on his local knowledge of the local market and the vacancy rates, in the area concerned or for the category of property concerned, that in the absence of his waiver the subsequent occupier will not occupy the relevant property".9 This amendment was later abandoned, possibly in view of the fact that this alternative regime would have imposed further administrative burdens on purchasers for whom the outstanding rates were a deal breaker and who were likely to go elsewhere, rendering such a provision ultimately pointless. Now, however, even purchasers who would have been willing to take a property subject to the rates arrears are freed of this requirement, to the (arguably greater) detriment of those selling the property.

The Notification Obligation

The ambiguity in the description of the penalty charge ("no more than 2 years outstanding rates") as a result of non-compliance with the Notification Obligation is undesirable in a taxation statute. A tax must be "imposed expressly and in clear and unambiguous terms".10 The ambiguity in the penalty is undesirable also from a commercial perspective. Even in circumstances in which all parties are properly advised, an owner or occupier's inability to pay outstanding rates will likely lead to an abandonment of the transaction in the case of a sale, or a delay in appointing a receiver or a liquidator, both of which are absurd results for a statute which purports to jolt the commercial property market.


An enactment which was intended to boost the commercial property sector may end up penalizing commercial landlords. The new regime is quite punitive, giving a short (2 weeks) time for notification, or else incur up to two charges on the property; it is also not clear whether the penalties imposed by Section 32 are discretionary and so this is an area urgently requiring clarification. Agents of a company such as receivers and liquidators who seek to sell the company should be particularly prudent in ensuring the new requirements are properly met.


[1]Local Government Reform Bill 2013: Second Stage ( accessed 27 May 2015.

[2] Sarah McCabe, "Firms now off the hook for any rates arrears of previous tenants" (Irish Independent, 25 January 2014) accessed 27 May 2015.

[3] ( accessed 28 May 2015.

[4] Ratford v Northavon Rural District Council [1987] QB 357.

[5] Ratford v Northavon Rural District Council [1987] QB 357, 379.

[6] Brown v City of London [1999] 1 WLR 1070, 1079.

[7] Ratford v Northavon Rural District Council [1987] QB 357.

[8] From the Law Society announcement: ( accessed 27 May 2015.

[9] Local Government Reform Bill 2013 (first additional list of amendments) ( accessed 28 May 2015.

[10] Revenue Commissioners v Doorley [1933] IR 750, 765 per Kennedy CJ.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
21 Jan 2018, Seminar, Dublin, Ireland

We are delighted to sponsor Airline Economics Growth Frontiers 2018 Conference taking place in the Shelbourne Hotel in Dublin from 21 to 24 January 2018.

23 Jan 2018, Business Breakfast, Dublin, Ireland

We are pleased to sponsor a Dublin Chamber of Commerce breakfast briefing at 8am on Tuesday 23 January at our offices at South Bank House, Barrow Street, with Vanessa Tierney of Abodoo.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions