Landlord’s Obligations under the Local Government Rates and Other Matters Act 2019

This article will look at the key provisions of the Local Government Rates and Other Matters Act 2019 (“the Act”) which, while enacted, has not yet been commenced.

While the provisions of the Act envisage that an owner-landlord would be responsible for unpaid tenant rates before a property could be sold, this is intended to be amended, as set out below.

Duty to inform rating authority of transfer of relevant property

Section 11 of the Act contains the same procedure as section 32 of the Local Government Reform Act 2014, which will be repealed under the Act.

By way of reminder, it provides that where a property, or an interest in a property, which is subject to rates is transferred it shall be the duty of the owner (prior to the transfer) of the property to notify the rating authority in writing of the change of ownership within the 2 weeks following the date of the transfer.

It is the duty of the person transferring the property, being either the owner or the occupier, to discharge all rates for which they are liable for at the date of the transfer of the property (or of an interest in it).

A penalty (equivalent to not more than two years of the outstanding rates due from the previous occupier) is payable by the owner of the property where the previous owner fails to comply with this section.

Payment of rates on sale of relevant property

Section 13(1) of the Act provides that the owner of property (which includes a receiver, a landlord or a mortgagee in possession) must, prior to completion of any sale of the property, pay all outstanding rates under the Act on that property together with accrued interest. This places a heavy burden on an owner wishing to sell a property.

In light of this, where landlord’s consent to an assignment of a lease is sought, it would be prudent to require the tenant to provide evidence from the local authority that rates are paid up to date before granting such consent.

Concerns were expressed by the Law Society to the Department of Housing, Planning and Local Government in relation to Section 13(1) which has the effect of making Landlords liable for the failure of tenants to pay rent before a property can be sold. The Department agreed with the Law Society that this is at odds with the Act’s Explanatory Memorandum and the intention of the Legislature and has confirmed that it intends to remedy the section by way of legislative amendment before the section comes into effect.

Discharge of rates by set-off

Section 7 of the Act provides:

“Where a sum is due to any person by a local authority and, at the same time, a sum is due to such local authority by such person in respect of rates the former sum may be set off against the latter either, as may be appropriate, in whole or in part.”

Given the wide definition of owner under the Act this section would appear to permit local authorities to apply set off in respect of receivers or banks in control of a number of properties owned by the same borrower owing the sums to the local authority.

Unpaid rates are to be a charge on property

Section 14 of the Act provides that any unpaid rates and interest will remain a charge on the property which will continue to apply without time limit until the unpaid rates are discharged in full.

How we can help

For further information on this topic or for any queries please contact Rob Gibbons in our Commercial Real Estate Department on 01 440 8300 or rgibbons@bhsm.ie.

This article is for general information purposes.  Legal advice must be obtained for individual circumstances.  Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.