City council CFO recommends 50% vacant premises rates reduction be retained

The chief financial officer of Cork City Council has recommended that the 50% commercial rates reduction for vacant premises be continued despite all the submissions made by the public asking for it to be removed.

As of January 1, 2024, property owners can apply for a 50% vacancy reduction in commercial rates if their property is vacant.

To qualify for vacancy abatement, the premises must be unoccupied and vacant for the purpose of demolition, redevelopment or repairs; or because the owner is unable to find a suitable tenant.

Chief financial officer John Hallahan recommended that vacancy abatement rate remains unchanged at 50% for 2025.

Cork City Council requested written submissions from the public on this matter, and 24 submissions were received, all of which suggested that the vacancy relief should be removed.

However, none of the submissions were from property owners, who “may face the burden of paying rates on vacant property and may also be incurring the cost of renovation works,” Mr Hallahan advised.

Submissions 

Removing vacancy relief could result in property owners renting at lower rental rates to avoid higher charges, those who sent submissions said, while others thought that it could see owners make premises available to voluntary and community groups.

Several submissions suggested staggered rates relief, with rate reductions being possible for properties vacant a short period, but rates increasing to discourage longer-term vacancy.

Another submission suggested that vacant commercial property might be converted to domestic use if relief was removed, while several noted the negative effect of vacancy on other businesses and the tourist potential of Cork.

However, Mr Hallahan noted Cork County Council currently applies 100% vacancy relief , saying: “Property owners facing a sizeable rates bill in the city or a zero rates bill for a vacant property in the county could decide the county is a more attractive area for investment.”

Additionally, “collection on vacant property is difficult”, he said, explaining: “Despite legal action, many owners claim an inability to pay on vacant property”.

“A lot of property that attracts the vacancy relief do not, in fact, pay the remaining 50%. Accounts where vacancy was applied in 2023 had an arrears balance of €3,593,479.09 at year end.”

Finally, he said: “Increased costs of rates could incentivise property to fall into a further state of disrepair. Doubling the cost of rates while trying to maintain a building could prove difficult for property owners.”

The abatement rate will have to be approved by resolution of the council at the budget meeting, which was due to be held on November 14 but was postponed until after the election and will now be on Wednesday, December 4.

Labour party councillor for Cork City South East Peter Horgan told The Echo he supported delaying the budget meeting to continue negotiations on issues such as this. 

“There’s €8m that should be collected for vacancy, we’re writing off €4m but we’re not even collecting €3.5m.

“I don’t think giving a carte blanche discount across the board is acceptable anymore,” he said, suggesting “a sliding scale” where rates increase depending on the length of dereliction would be more beneficial.

“Companies and businesses I deal with are looking at vacant storefronts for years, they’re paying their rents and trying to do what they can for the city, but other business owners aren’t — that’s unacceptable.”

A stronger move to collect the rates due would give money to offset the budget deficit that has seen the executive seek to raise rates on traders, he said, adding: “If people are not paying up, then the hammer needs to come down. 

“If I don’t pay my mortgage, the bank is not going to look too favourably on me — we need to tell property owners that we’re not going to let them sit on vacant properties and allow them to go into dereliction.”