IRELAND 23 May 2013
Special Report Number 60: The Valuation Office Summary
Summary of Findings
Local authorities raise rates on the basis of property valuations which are carried out by the Valuation Office. Rates account for over 25% of their income. Consequently, they are highly dependent on valuation services provided by the Valuation Office. The Valuation Office also provides a non-statutory property valuation service to government departments and public bodies.
Over the years the rateable valuation of properties has diverged from their rental value. Under legislation enacted in 2001, provision was made for the revaluation of all commercial and industrial property. This was designed to bring rateable property valuations into line with current rental values. The Valuation Office began a revaluation programme in 2005.
This examination set out to review
- the arrangements for the provision of valuation services to rating authorities and public bodies
- the progress in implementation of the revaluation programme
- how overall performance is managed.
My examination found that restructuring following the enactment of the Valuation Act, 2001 has impacted positively on the valuation revision process. The Valuation Office has had considerable success in addressing an appeal culture that existed previously. By focusing on the quality of revision work, resources previously used to process appeals have more than halved. As a consequence, overall productivity in the provision of valuation services improved by around 35% over the period 2001 – 2006.
In the case of non-statutory market valuation work the examination found that there was a substantial backlog. Cases not processed at the end of 2006 represented approximately 18 months work. Delays in processing on this scale impact on the capacity of commissioning agencies to efficiently complete transactions for which the valuations are required. The Valuation Office needs to implement an improved method of delivering this output and ensure that a timely service can be provided to those agencies that for reasons of confidentiality cannot source the service elsewhere.
Cases should only be submitted for valuation where there has been a material change of circumstances and the property is capable of beneficial occupation. 9% of cases referred for valuation were rejected by the Valuation Office in 2006 for not meeting this criterion.
The Valuation Office still has some work to do before it will have a target setting and measurement system that reflects its output in a fair and consistent manner.
- The Valuation Office uses different bases for target setting and measurement. Individual and team targets are based on requests for valuation while organisational performance is based on valuations completed. The review found an inconsistent relationship between requests and valuations completed.
- The Valuation Office only measures performance from the point a case is assigned. Timeliness of case assignment diminished during 2006. Under the provisions of the Local Government (Business Improvement Districts) Act passed in late 2006 the Valuation Office will face a further challenge in ensuring the timeliness of revision output to enable rating authorities to charge entry fee levies in new build cases at the earliest point in time.
Revaluation of Property
No national revaluation of property has taken place since the original Griffith Valuation of 1852 – 1865 with the result that there are acknowledged anomalies and inequities in the system. The revaluation process involves the making of current valuations for over 180,000 commercial and industrial properties. Industrial action by staff in the Valuation Office delayed the commencement of the revaluation process. To date, the revaluation process has been activated only in two rating authorities – South Dublin County Council (in November 2005) and Fingal County Council (in March 2007). About 84% of targeted revaluations in the South Dublin County Council area were completed in 2006.
The examination found that the original ministerial expectation that the first countrywide revaluation would be entirely completed within five years of commencement will not be realised. Output per valuer is around 25% of the levels envisaged by consultants who assisted the Valuation Office in framing the revaluation programme. The Valuation Office considers that the output levels envisaged by the consultants were unrealistic given its practical experience in conducting revaluations in the South Dublin County Council area. Also, staff recruitment and retention has proved difficult. The Valuation Office, in conjunction with its main stakeholders, needs to determine a realistic completion target for the overall revaluation of the country.
Due to the extended timeframe now envisaged and based on current productivity levels, the budget for the project could be up to five times that projected by the consultants, before taking account of inflation. The Valuation Office should review the costing of the programme taking account of the mix of resources necessary in the light of its experience to date.
Currently, the average cost of a first revaluation of individual properties is over €600. While it is acknowledged that a first revaluation entails extra work, it was noted that the average cost of a revaluation in the UK was considerably lower. Although revaluation programmes there are now largely desk-based there would be merit in reviewing the approach to revaluation used in that jurisdiction with a view to identifying any instances of transferable good practice.
On completion of the full cycle of revaluation in the South Dublin County Council area, there is an urgent need for a revised strategy for the roll out of the revaluation programme which addresses its resourcing, timeframe and budget.
The examination found that, overall, the Valuation Office has set out its strategy and has business management, corporate governance and risk management systems. However, it needs to focus its efforts better by identifying and aligning specific initiatives with its strategic objectives.
The Valuation Office has set up business process re-engineering and performance measurement groups which are involved in identifying obstacles that prevent individuals from working in an efficient and rewarding manner and agreeing methodologies for the measurement of performance in valuer grades. It is important that this work is brought to a conclusion and performance measurement policies agreed across all grades.
In the area of management accounting, the examination found that only a small proportion of overall expenditure is specifically allocated to designated cost centres. 85% of 2006 expenditure was coded to the Valuation Office’s general cost centre, so most costing information is based on the apportionment of costs rather than direct capture. The Valuation Office will only derive full value from its investment in its management information systems if it establishes data capture and analysis procedures for its expenditure which allow it to accurately and systematically cost its activities and calculate unit costs.
The review found that there was an increase in customer satisfaction ratings with the services provided by the Valuation Office up to 2005. While there was a drop across a range of criteria in 2006, four rating authorities interviewed as part of the examination process were generally satisfied with the service. On the other hand, the County and City Managers’ Association said that authorities have concerns about perceived staffing reductions, a decrease in targets, the effectiveness of communication and changed procedures that require more information from and input by authorities. The Association stated that the strict deadline imposed by the Valuation Office for the submission of listings does not take into account the extent and ongoing nature of development and construction which invariably means that some properties are completed after the Valuation Office’s deadlines.
Currently, only two rating authorities are engaged in the electronic exchange of information with the Valuation Office while discussions are ongoing with a further three authorities who are in the process of developing their systems to accommodate electronic transfers. It would facilitate valuation and rating processes if there were interoperability and greater uniformity of systems used by rating authorities and the Valuation Office.