LOCAL GOVERNMENT (CHARGES) ACT 2009 – NON PRINCIPAL PRIVATE RESIDENCE CHARGE

The Local Government (Charges) Act 2009 gives effect to the Government’s decision to introduce a €200 charge for non principal private residences. The liability for the charge arises mainly in respect of rental, holiday and vacant properties, and the revenue stream will flow to city and county councils. Liability will arise for owners of the property concerned at a point in time, being one day in each calendar year to be known as the “liability date”. 31 July will be the liability date in 2009 and 31 march in subsequent years. Failure to pay the charge within one month of the date it falls due will result in a liability for a late payment fee calculated at the rate of €20 for each month or part of a month that the charge remains unpaid.

Provision is also made for ancillary provisions such as: agreements between local authorities or between local authorities and the either or both the Local Government Computer Services Board and the Local Government Management Services Board; data sharing; and offences and penalties.

The Act represents a significant broadening of the revenue base for local authorities. Certain residential property will now provide a revenue stream to local authorities for the first time in over thirty years since the abolition of domestic rates in 1977. Longer term, the taxation of domestic property is likely to be guided by the report of the Commission on Taxation which is due later this year.
Main features of Act

· The Act provides for the introduction of a charge of €200 per annum on non principal private residences.

· The Act is relatively short and straightforward. The charge arises at a point in time each year called the ‘liability date’. It applies to residential property with certain exceptions, the most important being principal private residences. Owners (not occupiers) are liable to pay it, and the funds will be paid to local authorities (county and city councils). It can be said to be a form of self-assessment in that it is for the owners of residential property to assess whether they are liable to pay the charge, and local authorities are not required to issue bills. Failure to pay within one month of the due date incurs a late payment fee of €20 a month.

· The interpretation sections (1 and 2) are the most complex and substantive in the Act. These define “building”, “dwelling” and “residential property”. Together, these definitions represent the cornerstone of the Act: “building” defines structures; “dwelling” defines use; and together these form the core of the definition of “residential property” which is what the charge will apply to.

· Liability will arise at a point in time each year, and this day is called the ‘liability date’. 31 July has been prescribed as the liability date for 2009 and 31 March will be the liability date in subsequent years. Payment falls due two months after the liability date.

· The Act exempts certain types of property and owners from the charge. The most important exemption relates to principal private residences. Other types of buildings exempted are those: newly constructed but unsold; with heritage merit; let directly or indirectly by local authorities for social housing; let by voluntary housing bodies; the subject of a shared ownership arrangement with local authorities.

· Other exemptions apply where: a person purchases a property for use as a principal private residence provided they dispose of their existing property within 6 months; a charity owns the property; and where a spouse or ex spouse has an interest in a property after a divorce or separation agreement but does not reside there. The Act also provides that mobile homes are exempt, and that certain ‘granny flats’ and principal private residences vacated due to illness resulting in incapacitation are exempt

· The Act provides that payment of the charge shall be made to county and city councils. The Budget estimated the annual yield from the charge at €40 million but it is estimated from census and other data that there may be 400,000 properties in the state liable for the charge. The full potential yield would, therefore, be closer to €80 million. It is likely that collection levels from rental properties (200,000) will be higher than holiday homes and vacant homes because PRTB data will assist local authorities to identify rental properties.

· In the event of non payment of a charge for which a person is liable by the due date, a late payment fee of €20 will apply for each month or part of a month for which the charge remains unpaid. An unpaid charge and late payment fee will be a charge against the property in respect of which the liability arose.

· Local authorities can delegate functions to the Local Government Computer Services Board and/or the Local Government Management Services Board. In practice the LGCSB will design and operate a web-site facilitating electronic payment of the charge.

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