Rates as percentage of rent, 30%!!!

LordNorbury

Hi folks,

Am a small business owner, recently had my eye on another project that I wanted to delve into in a similar area, will need a small warehouse unit for this project, for several reasons, don't want to start it from my current unit/outlet.

Took a spin around some small industrial units this afternoon, around the Parkwest/Dublin 10 area, small little industrial units circa 150-200 Sq. metres.

Rents are being quoted as around 200 per week to 1K a month, which seems reasonable, but rates, wait for it, are a minimum of 4K a year?!? So if you were to say that rent was 12K a year, working off the upper end of what is available around the area, you could pencil in rent as around 3K a quarter, but the local authority rates are 1K a quarter or 1/3rd the cost of the rent!!!

This seems outrageous to me, that even though rents have come down in recent years, that the local authority is still inefficient, and can still claims these kind of crazy costs in relation to what are really absolutely tiny business units on the grander scheme of things.

It has my píss boiling today I have to say, that even though a property tax is now in place, meaning that the cost of running a local authority is now spread more evenly and more fairly across all users of facilities that are provided by a local authority, that even though households now pay around 350 Euro a year in property tax, small businesses are still being forced to contribute what is an insanely inordinate amount of money to these union infested, inefficient, backwards, local authorities. Why have rates not been adjusted significantly downwards, in light of the fact that every household in the county is now paying a minimum of 350 Euro a year to their local authority?

jimmii

You can appeal the rates that sounds pretty high! Ours last year worked out at <20% maybe we just didn't get such a good deal on rent!!

delahuntv

That's dirt cheap rent and landlord builds in the rates element.
Think of it a different way - is it worth 16k a year?

If its the units in the enterprise centre, those rents used to be around 25k a year.

Maybe move out a little to greenogue? Rents and rates are even cheaper there.

pedronomix

Rates ( or more correctly rateable valuations) on Industrial building vary wildly depending on office content/age of building/location etc etc. Retail space is a whole different ball game, as are office buildings. Beware also of industrial estate service charges, generally similar levels to rates!

TheCostumeShop.ie: Ronan

Rates are a pain, ours would exceed 30%.

We spent years arguing with the council who were insisting that we pay rates on a warehouse that we neither rented, owned or occupied. It's like banging your head against a brick wall and in the end we had to hire in a consultant to explain it to them in more legal terms, which they eventually conceded to.

There's a really good example of a formally great company in Laois, called Feile Foods who were a meat processor. The owner said to me the rates bill was one of the final straws that pushed them over the edge. But get this, the council had recently gone to tender to supply the meat for the local Portlaoise prison and because the local business had to pass on the imposed council rates, Irish minimum wage and Irish beef prices; the Irish Government awarded the contract - again supply of meat to an Irish Prison - to a UK based company with lower rates, wages and overheads - all to save a mere €6,000 (on a 2.5m contract!). Talk about a vicious circle. If they had won the contract they would have created 8 more Irish Jobs and paid hundred's of thousands more in Irish taxes, instead Feile Foods went to the wall and the jobs all made redundant.

So the council were happy to charge the high rates but weren't winning to buy from a business who were paying them as the council rates made them uncompetitive. It makes my blood boil just thinking about it. :mad:

jimmii

That's ridiculous! You really have to question the people making those decisions you would think when the difference is that small they would look at the overall effect it would have on the local economy and not just how it looks on their balance sheet.

How were the council trying to get you to pay rates on somewhere you didn't own, rent or occupy??!!

LordNorbury

TheCostumeShop.ie: Ronan wrote: »

Rates are a pain, ours would exceed 30%.

We spent years arguing with the council who were insisting that we pay rates on a warehouse that we neither rented, owned or occupied. It's like banging your head against a brick wall and in the end we had to hire in a consultant to explain it to them in more legal terms, which they eventually conceded to.

There's a really good example of a formally great company in Laois, called Feile Foods who were a meat processor. The owner said to me the rates bill was one of the final straws that pushed them over the edge. But get this, the council had recently gone to tender to supply the meat for the local Portlaoise prison and because the local business had to pass on the imposed council rates, Irish minimum wage and Irish beef prices; the Irish Government awarded the contract - again supply of meat to an Irish Prison - to a UK based company with lower rates, wages and overheads - all to save a mere €6,000 (on a 2.5m contract!). Talk about a vicious circle. If they had won the contract they would have created 8 more Irish Jobs and paid hundred's of thousands more in Irish taxes, instead Feile Foods went to the wall and the jobs all made redundant.

So the council were happy to charge the high rates but weren't winning to buy from a business who were paying them as the council rates made them uncompetitive. It makes my blood boil just thinking about it. :mad:

This is the kind of stuff that makes my píss boil. There really is a compelling case to be made for small business people to get into politics and start dismantling this sheer lunacy that we regularly hear about. It makes more sense for local authorities to leave units empty and levy the absolute shít out of occupied units, than to reduce the overall extent of commercial rates across the board so that they don't exceed 15% of market rent. This is perfectly achievable given that every household in the county is now contributing towards the cost of running local authorities.

Sadly what we are dealing with is deeply embedded selfishness and greed, where the pigs with their snouts in the public sector trough who work in these local authorities, these guys won't take pay cuts and won't allow the badly needed reform that is long overdue to allow for these punitive levy's on small business to be faced up to and eliminated.

Small business people themselves also need to organise themselves better and push these issues straight to the front of government decision making.

LordNorbury

jimmii wrote: »

That's ridiculous! You really have to question the people making those decisions you would think when the difference is that small they would look at the overall effect it would have on the local economy and not just how it looks on their balance sheet.

How were the council trying to get you to pay rates on somewhere you didn't own, rent or occupy??!!

These people live in a parallel universe. The idea of having to cover their wage, the idea of having to make a profit, the idea of having a poor month on the sales front, the idea of sales being up and down month on month, year on year all during the last 7 years of recession, yet your overheads being completely fixed, these concepts are completely alien to the bean counters in the local authorities.

All they understand is doing what their union tells them to do, which is usually obstructing any change that might be required to make them more efficient, and how to extract as much as is possible in terms of securing their pay, terms and conditions, while giving as little back in return.

They see small businesses as things to be bled dry and that only exist to serve them...

TheCostumeShop.ie: Ronan

jimmii wrote: »

How were the council trying to get you to pay rates on somewhere you didn't own, rent or occupy??!!

Literally just that, sending an invoice demanding payment for rates on property we don't own rent or occupy. We got the owner of the property to come to a meeting and confirm the area had absolutely nothing to do with us. Didn't help.

LordNorbury wrote:

Small business people themselves also need to organise themselves better and push these issues straight to the front of government decision making.

Nice in theory but to be honest business owners should have their hands 110% full growing their businesses, its nice to give back but small business owners can't even begin to compete against large lobby groups. Politics is a different skill set requiring patience that certainly I wouldn't have.

LordNorbury

TheCostumeShop.ie: Ronan wrote: »

Literally just that, sending an invoice demanding payment for rates on property we don't own rent or occupy. We got the owner of the property to come to a meeting and confirm the area had absolutely nothing to do with us. Didn't help.



Nice in theory but to be honest business owners should have their hands 110% full growing their businesses, its nice to give back but small business owners can't even begin to compete against large lobby groups. Politics is a different skill set requiring patience that certainly I wouldn't have.

Sadly I'm inclined to have to agree with you, there is definitely a case to be made though for a properlly functioning small business representative group that starts exercising some long overdue clout, ISME and SFA, Chambers of Commerce, are all far too long in bed with the establishment. It's exactly what the problem is with the country, too many schoolteachers creating business and general taxation policies that simply don't work for small business, which is the lifeblood of this country.

neris

were in dublin city and paying over 8k in rates on 35k rent now. They were trying to charge us 14K and we appealed it using a surveyor which cost us 600 euro and money well spent. The councils are a bunch of cowboys when it comes to rates. They want the payment either in 1 lump sum or 2 payments in the year. Last year I paid them off over 12 months and they didnt like that but **** em its my cashflow and im not getting my business in the ****s just coz they want money now. Ive far more important suppliers who get paid 1st because they actually give me a service or product. The council dont collect my bins, give me parking or anything else.

Got the 2015 rate bill last week and one thing that really pisses me off is how they word the bill. If any company sent an Invoice with the words "I Demand" on it they,d be told to heres your payment now we,re off to your competitor.

enricoh

A mate if mine had a furniture business that closed with the Celtic tiger. 30k a year rates- he said it was like paying a lad 600 a week that never turned up!
After being closed 3 years he had a lad Willing to rent it off him for 30k including rates. So he went to council n offered them 15 n 15 for him ( well the bank!) No chance. Then offered 20/ 10 - no chance. Its still sitting there.

LordNorbury

enricoh wrote: »

A mate if mine had a furniture business that closed with the Celtic tiger. 30k a year rates- he said it was like paying a lad 600 a week that never turned up!
After being closed 3 years he had a lad Willing to rent it off him for 30k including rates. So he went to council n offered them 15 n 15 for him ( well the bank!) No chance. Then offered 20/ 10 - no chance. Its still sitting there.

This is the insanity of it. It goes to show how poorly small business is represented at national level, when councils now have every house in their local authority paying them a property tax of a few hundred Euro, yet commercial rates are still insanely high. I'm not involved with Chambers of Commerce but I saw recently that the Dublin chamber of Commerce I think it was, was fielding candidates for local elections. I wouldn't be into politics myself but something I think seriously needs to change when it comes to how small businesses are being treated in this country.

pedronomix

enricoh wrote: »

A mate if mine had a furniture business that closed with the Celtic tiger. 30k a year rates- he said it was like paying a lad 600 a week that never turned up!
After being closed 3 years he had a lad Willing to rent it off him for 30k including rates. So he went to council n offered them 15 n 15 for him ( well the bank!) No chance. Then offered 20/ 10 - no chance. Its still sitting there.

This is a naive expectation in the extreme. How is the guy next door paying the full whack supposed compete, is he not entitled to the same and, for that matter, every other business.

LordNorbury

pedronomix wrote: »

This is a naive expectation in the extreme. How is the guy next door paying the full whack supposed compete, is he not entitled to the same and, for that matter, every other business.

The reality is that rates are too high for everyone. They should never exceed 20% of rent, but the problem is that rates are not tied or related to market rent in any way, they are simply the cost of running the local authority, spread over the number of businesses in the local authority, with variables concerning the area and the size of the building/site, used to adjust the price up to as high as they can demand for it.

Whatever about there being a case for rates of 20% of rent for large units in new and modern retail parks, a lot of the industrial space in Dublin was built back in the 60's, 70's and 80's. Even property that was built in the 80's has the appearance of being run down and the whole estate that such a unit would be in, appears to be lacking footfall and lacking general daily activity/trade, and looks like there could be tumble weed blowing down through the main road. But the demand for rates in these run down areas are as high as anywhere else?!?

pedronomix

LordNorbury wrote: »

The reality is that rates are too high for everyone. They should never exceed 20% of rent, but the problem is that rates are not tied or related to market rent in any way, they are simply the cost of running the local authority, spread over the number of businesses in the local authority, with variables concerning the area and the size of the building/site, used to adjust the price up to as high as they can demand for it.

Whatever about there being a case for rates of 20% of rent for large units in new and modern retail parks, a lot of the industrial space in Dublin was built back in the 60's, 70's and 80's. Even property that was built in the 80's has the appearance of being run down and the whole estate that such a unit would be in, appears to be lacking footfall and lacking general daily activity/trade, and looks like there could be tumble weed blowing down through the main road. But the demand for rates in these run down areas are as high as anywhere else?!?

I am afraid your are quite incorrect on the methodology as to how rates are calculated. The rates charged on any commercial property are the rateable valuation of a property multiplied by the annual rate struck by the local council. To vary rates bills, it is possible to have your property's rateable valuation re-rated, usually using a specialist surveyor valuer. Reductions for local area decline, building age, facilities , office content etc etc often lead to significant reductions. I have succeeded in doing this 3 times in Dublin over 30 years. Change of use can lead to higher or lower RVs too!

LordNorbury

pedronomix wrote: »

I am afraid your are quite incorrect on the methodology as to how rates are calculated. The rates charged on any commercial property are the rateable valuation of a property multiplied by the annual rate struck by the local council. To vary rates bills, it is possible to have your property's rateable valuation re-rated, usually using a specialist surveyor valuer. Reductions for local area decline, building age, facilities , office content etc etc often lead to significant reductions. I have succeeded in doing this 3 times in Dublin over 30 years. Change of use can lead to higher or lower RVs too!

Yeah but the point remains, rates are not related to market rent. So you can have a serious market adjustment to rent, as has happened here in this country, however the rates will not go through the same adjustment, not unless you engage in a drawn out and expensive challenge to the current rates being charged. I've head of people who have tried to do this and the outcome has been that their rates have been increased!

It is also true that local authorities now have a massive new revenue stream in the form of a property tax on every home in their county or local authority area. The model for financing local authorities has been completely changed, so why has the burden not been reduced on those small businesses who previously were the only contributors to the cost of running a local authority, now that the model has completely changed and every household must make a yearly contribution towards the cost of providing amenities and resources within the area that they live?

neris

LordNorbury wrote: »

Yeah but the point remains, rates are not related to market rent. So you can have a serious market adjustment to rent, as has happened here in this country, however the rates will not go through the same adjustment, not unless you engage in a drawn out and expensive challenge to the current rates being charged. I've head of people who have tried to do this and the outcome has been that their rates have been increased!

When you get your rate bill you appeal it especially if the local council have over valued your rent. We appealed our rates bill coz they had over valued the rent that should be paid on the building. Saved us 6k a year cost us €600 to do it