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Northern Ireland Assembly

Tuesday 20 February 2001 (continued)

Mr S Wilson:

I am not going to go over all the points that have been made, as that would simply be a repetition.

From my experience of the issue, let me note some of the excuses that have been made by the Department for refusing to act on this issue. It is not a new issue. Since I was first elected 20 years ago, has been an ongoing sore in redevelopment areas. The first time I came across it was in Castlereagh Street, where 11,000 homes in east Belfast were going to be affected by the redevelopment proposals. Arterial routes especially were going to be affected by the removal of such a large part of the population.

However, the Department's excuse, made time and time again, does not stand up to scrutiny. Mr Robinson has already dealt with the question of resources. The Department very often says that it cannot respond, because so many properties are affected by this that it simply does not have the resources to revalue properties downwards when redevelopment areas are declared.

However, as has been pointed out, properties that have been improved can be dealt with fairly quickly. I would appreciate it if the Minister could give us some indication of why, since most of the shops involved provide local services, example cases can not be taken and then applied across a range of commercial properties in an area. That would mean that every property would not have to be individually revalued, and, at the same time, cognisance could be taken of the effect that redevelopment has on commercial activity.

The second argument made to me is that redevelopment in adjacent streets may well affect part of the business of shops on arterial routes. However, that is not where they get all of their business from anyway; much of it comes from outside. The fact that they are on an arterial route means that a great deal of their business is left intact, and the removal of some streets behind those shops does not greatly affect the valuation of the properties.

First, one has only to listen to what traders say about their takings to realise that that is not the case. Secondly, it must also be accepted that many of these redevelopment areas cover many properties. Mr Peter Robinson mentioned the example of the Castlereagh Road. Approximately 700 houses adjacent to the shops on the Castlereagh Road have been removed, which represents a substantial customer base.

Mr David Ervine mentioned the Newtownards Road. The present proposal for redevelopment on this road - in fact, there are several proposals, which have rolled into each other over the years - will involve over 800 houses being knocked down. Similar amounts of houses have been knocked down in redevelopments that have just finished in areas adjacent to it. A substantial customer base has been taken away, and to say that redevelopment affects commercial properties only in a very small way is not true.

It does not matter whether you are talking about east or north Belfast, you only have to look at the tracts of areas involved to see that a large number of properties have been removed and, therefore, that a large number of customers have been removed.

The other thing that must be borne in mind is that many of those shops may depend on outside trade. However, whenever redevelopment takes place, it not only moves the existing customer base, it also blights an area; it makes an area unattractive. People do not feel happy about going into an area that seems to be derelict.

Very often there are areas of waste ground; frequently there is rubble lying around. As a result of the isolation, there could be anti-social behaviour, which, in turn, makes it appear even more derelict. Therefore, people steer away from it.

The Department's argument that the removal of the houses in the immediate vicinity will not leave businesses without outside custom coming in is not an acceptable one. It is clear that people are not prepared to come into areas that have been blighted by redevelopment, because they do not look attractive and because of the kind of behaviour that often goes on in them. Because of that blight, people are not happy about taking cars in, for example, and leaving them parked in semi-derelict streets adjacent to commercial properties.

6.00 pm

A third reason, which I have heard from the Department in the past, has been that it is only a temporary arrangement. However, anyone who has lived through the redevelopment process will know that it takes about eight years from the time that a redevelopment area is declared until the redevelopment and new properties are finally put in place. It takes that long for the vesting, relocating people, properties being knocked down, planning permissions being sorted out and getting builders on site.

Areas take eight years to go through that transition, and adjacent commercial properties are detrimentally affected during the entire period. For the Department to argue that it sorts itself out fairly quickly, and that revaluing downwards and then upwards again would tie up resources, fails to recognise how long the redevelopment process takes. Therefore, it is important that the Minister makes some response to the genuine claims of those people who try to hang on in redevelopment areas, so that services are still there when the area is redeveloped.

It is part of planning policy to attract people back into the inner city and to develop on brownfield sites. People will not be attracted if there are no local services. Unfortunately, redeveloping and making inner-city sites attractive again tends to make it more difficult for services to survive in the interim period.

The Minister of Finance and Personnel (Mr Durkan):

I thank Mr Robinson for bringing this matter to the House and, in particular, for drawing attention to some significant issues and considerations in relation to valuation.

There are a couple of points that may need to be set in context, particularly the question of the basis of rateable valuations. A property's rateable value is based on the rental value that the property would be expected to achieve in its actual state and circumstances. That is based on a valuation date, and the current valuation date for all commercial properties is 1 April 1995, which was the valuation date before the last revaluation. I have already said that there will be a further non-domestic revaluation, which the Assembly has agreed to, effective from 1 April 2003.

Properties were last revalued on rents that existed on 1 April 1995. Accordingly, the rateable values reflect the social, economic and environmental circumstances that prevailed at that time. I recognise that particular point; it is true for all properties. It is common to the valuation base of all properties, even new properties that might be developed and are subject to planning permission, or even, as Mr Robinson said, to valuers who might inspect properties and try to put a valuation on extensions. Every valuation refers to that valuation date in 1995. That is part of the valuation system. Obviously, when there is a revaluation, all ratepayers should be charged in direct proportion to the rental value of the property that they occupy.

It is important that a uniformity of liability is established, although I recognise that it is eroded over time because there are differential shifts in rental values from one property to another, and from one location to another, for various reasons - redevelopment being one of them. That is one of the reasons why we need regular revaluations. They are the most sensible way to ensure that valuations are as reflective as possible of real and prevailing circumstances.

However, I make the point again that the basis of valuation is not just pure assumption by the valuers. It is based on rental value. It essentially represents the rent the premises would command if let on the open market at a fixed point in time. That represents approximately 40% of rental value, which in turn averages about 8% of capital value.

One could argue that rates therefore equate to about 3% of capital. I am not saying that to minimise the significance of the rate burden, particularly for businesses that may be trading in marginal circumstances - not least because of changes in their circumstances.

There is limited scope between revaluations to take changes in economic circumstances into account. Contrary to what Sammy Wilson said, I believe that if we were continually revising assessments up and down to reflect all sorts of changes - either in the particular trading circumstances of given businesses or underlying and market conditions - the valuation system would soon become unworkable. The concentration at present is therefore on trying to establish regular and timely revaluations.

However, highly localised factors that could be combined with some physical change can be reflected in altered assessments between revaluations. I take it from what Mr Peter Robinson said that he has some knowledge of that, but he believes - or the people who have spoken to him believe - that such reassessments have led only to fairly marginal adjustments in the valuations.

Anything that is being done here is constrained by the rating law, and that governs the conduct of the valuers. It is the rating law that governs this; it is not primarily a matter of resources. It is not a case of the Valuation and Lands Agency choosing not to do something just because it has not got the resources, or of the Department choosing not to allow the agency to do it by not allocating it the necessary resources. A change in the character of an area is really a matter to be picked up in the revaluation.

There is an appeals process. People can appeal a revaluation and, if they are not satisfied, the Lands Tribunal is an independent court in that regard. If people are aggrieved with a rating assessment they can make an application to the district valuer and, if they are still not satisfied, they can appeal to the Commissioner of Valuation and then to the Lands Tribunal.

The district valuer in Belfast is not aware of any application for revision of the valuation list on grounds of location in, or close proximity to, a redevelopment area. Similarly, there are no appeals to the Commissioner of Valuation or the Lands Tribunal on this issue. Similar points apply to domestic properties. That issue was touched on by David Ervine in particular.

Given that the circumstances of the terms and evaluations are those that prevailed at the time of revaluation, little can be done to change the circumstances between revaluations, as some Members are seeking. Some reductions have taken place, and I will write to Mr Robinson with examples. They may be similar to some of the cases that people have brought to his attention. From the information that is available to me, I do not recognise the problem as acutely as Mr Robinson does. However, I recognise that people believe that revaluations should take place on the basis of any change in their trading circumstances.

No Member mentioned whether there were significant changes in the rents charged on some of these properties. Rents are relevant. If there were localised revaluations they would be based on the rental values that existed at the revaluation date, which, in this case, was 1995. That applies to new valuations to new properties as well as to any other property. They have than in common.

If we were to move in the way that Members want, it would raise the issue of whether we would be working from a uniform base. That is important - not least with regard to the regional rate.

Some Members said that the system is less than responsive and that they find that it is unable to make the revisions and changes in people's circumstances that they would like to see. The law restricts on that. If there are other ways in which the Valuation and Lands Agency is not considered to be user-friendly - as has been suggested - I, and the agency, will examine them.

Some Members referred to the benefits of professional representation. The Valuation and Lands Agency does not require people to be professionally represented, and it does not favour those who are. The agency is interested in fairness, and the valuer will always speak to the ratepayer no matter who else is involved. If there are any issues or grievances about the treatment of individuals, properties or cases that Mr Robinson wants to draw to my attention I will be happy to take those up with the agency.

I did not know the area of east Belfast the Member was concerned about, but I now know that it is the Castlereagh Road. The areas that are formally designated or recognised as redevelopment areas tend to be those with domestic properties. There are five such areas, and the Castlereagh Road is not one of them. Members talked colloquially about redevelopment areas rather than meaning a redevelopment area as designated by a Department.

I have noted the points that Members have made. Those points strengthen the case for ensuring that the Assembly efficiently progresses the revaluation of non-domestic properties and makes sure that there is a realistic valuation base for non-domestic rates. Revaluation is the key to that. However, I will make information available to Mr Robinson on any localised reviews that have taken place as they might assist in any representation that he may want to make about a location.

Adjourned at 6.15 pm.

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