Proposed reduction in landlord allowance announced

Finance Minister, Sammy Wilson, has announced proposals to reduce the landlord allowance on rates collection.

The Article 21 allowance, which provides a discount to landlords who volunteer to collect all rates due on their properties and pay for vacancies, is proposed to change from next April.

Explaining the reason for this move, Mr Wilson said: “Where a landlord enters into an agreement to pay rates on their property a 15% allowance is currently awarded, compensating landlords for collecting rates on the Department’s behalf. In addition, rates are paid whether the property is occupied or not. From next year, with the rating of empty homes at 100%, it would be unfair, to other ratepayers, to maintain the allowance at 15% as all vacancies will be charged for.”

The Minister stated that he had taken account of a range of issues, including the turnover level of properties, which tends to be highest in the private rented sector, and likely collection difficulties.

He continued: “I am therefore proposing to reduce the voluntary allowance to 12.5% in the private rented sector and 10% for Housing Associations and the Northern Ireland Housing Executive. Views are also being sought on the landlord allowance for the small number of non domestic properties affected.

“This change will have the added benefit of providing additional rates income of around £3million per year and should not have any impact on tenants.

“The consultation paper published today sets out the background to the issue and proposals for this area. Following consultation I will make decisions on the way forward, with the necessary legislation subject to Assembly approval. Any changes will be effective from 1 April 2011 and will apply to both current and new agreements with my Department.

The Minister also reminded landlords and tenants to be aware of their obligations, in terms of paying rates. “If you own or occupy a rented property, you need to be sure who is responsible for paying rates. This is set down in law, which overrides the provisions of any tenancy agreement. If there is any doubt you should contact Land and Property Services on 101. Further information can also be found on the nidirect website.

Consultation on the proposals will run until 28 October 2010.

Notes to editors:

1. 1. The decision to reduce to the landlord allowance, given the rating of empty homes, was first set out in the 2009 Review of Domestic Rating consultation report. Further details on this, the preceding consultation paper that covered this issue (on the rating of empty homes), and the consultation paper on the reduction in the landlord allowance can be found on the Rating Review Website.
2. 2. The consultation paper deals solely with the landlord allowance under Article 21 of the Rates (Northern Ireland) Order 1977. This allowance applies where a landlord enters into an agreement with the Department of Finance and Personnel to pay the rates on their property, whether it is occupied or not. Under this provision 100% rates are due, even when empty.
3. 3. An element of the current allowance is compensation for owners not being able to claim a vacancy, which outside of the agreement they would be able to claim for. With the introduction of the rating of empty homes vacancies cannot be claimed for and therefore the allowance must be reduced.
4. 4. A separate provision, Article 20 of the 1977 Order deals with circumstances where a landlord is obliged to pay rates on their property, providing an allowance of 7.5% against the rates charged for occupied periods. It does not cover periods of vacancies.
5. 5. All media enquiries should be directed to DFP Press Office on tel 028 9052 7375 or fax 028 9052 7149. Out of office hours please contact the duty press officer via pager number 0769971 5440 and your call will be returned.