There is currently some commentary in the marketplace regarding the recently enacted Local Government Rates and Other Matters Act 2019 which is giving rise to concerns that landlords will be required to assume liability for their tenants’ rates. This arises from a particular section of the Act which provides that, on the sale of property which is subject to rates, the vendor must first discharge any unpaid rates on that property.
Whilst the legislation has been enacted, it does not take effect until its provisions are formally commenced by the Minister. So far as we are aware, no timeline has been proposed by the Minister in relation to this.
The relevant section does not distinguish between situations where the liability for payment of the outstanding rates is that of:
(i) the vendor of the property or
(ii) a tenant in occupation of the property being sold by the vendor.
On the face of it, the section would require a vendor of investment property to discharge the tenant's rates liabilities as a condition of being able to sell the property.
We have made representations to the Minister for Housing, Planning and Local Government regarding both the practical and wider legal implications of this section in its current form. We are informed that the Minister and/or his officials are considering the matter.
It is worth pointing out that the potential application of the section to the sale of investment property would be contrary to that set out in Government documentation relating to the Act, which states that the section "provides for obligations on owners of a relevant property, before the sale of that property, to pay any rates payable by the owner to the local authority, including any interest on unpaid rates". It is also contrary to the statements of the Minister of State at the Department of Housing, Planning and Local Government in the Dáil on 30 January 2019 and in the Seanad on 9 July 2019 that: "This provision only applies to rates liabilities accrued by the owner when the owner is also the occupier of the property." NB Underlining of text has been added for emphasis.