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Landlords Bear Brunt of Infrastructure Costs as Business Rates Rise

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  //business-finance.news-articles.net/content/202 .. infrastructure-costs-as-business-rates-rise.html
  Published in Business and Finance on Monday, December 1st 2025 at 15:01 GMT by The Irish News

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Landlords to Shoulder the Costs of Planning and Infrastructure Failures as Business Rates Rise

Ireland’s recent decision to hike business rates has ignited a debate about who will ultimately pay the price. While the move was framed as a necessary step to close funding gaps for local authorities and to ensure that infrastructure and planning services receive adequate backing, many in the property sector see a different picture: landlords will bear the brunt of these costs, effectively acting as a conduit for public money into private pockets.

The article on The Irish News opens by outlining the government’s rationale. In the most recent budget, the Department of Finance announced a modest uptick in business rates – a small percentage increase that, when applied to the large and growing commercial property base across the country, translates into an additional €1.2 billion in annual revenue. This money is earmarked to support “planning and infrastructure systems that have been under‑funded for years,” the government said, citing a 2020 review that found local authorities were struggling to keep pace with the growing demand for new roads, broadband and sewerage upgrades.

The problem, the article explains, lies in the way Ireland’s planning and infrastructure provision is structured. The Planning and Development Authority (PDA) oversees a complex web of statutory duties: approving new developments, setting building standards, and ensuring that sufficient infrastructure is in place to support new uses. However, funding for these duties traditionally comes from local authorities, which in turn rely on business rates as a key source of revenue. When planning decisions are delayed, approvals are stalled or local authorities fail to secure enough capital to build new roads and upgrade utilities, the cost inevitably shifts to the developer or landlord who is responsible for ensuring compliance.

The article follows this logic with a number of interviews. A senior official from the Irish Local Government Association (ILGA) explained that the “current business rates structure unfairly distributes the cost of public services across all businesses, regardless of whether they use the infrastructure directly.” She went on to suggest that the solution lies in revising the way rates are calculated, tying them more closely to the actual use of local services.

On the ground, the reality is more complex. The piece includes a case study of Maple Lane Ltd., a Dublin‑based landlord who owns 15 retail units in the city centre. The company’s chief financial officer, Patrick Murphy, described how the company had already been shouldering the costs of roadworks that were delayed by planning approvals. “We’re already paying the local authority for road access and utility upgrades, but we’re not seeing any return on that investment. Now with the rate increase, it’s going to feel like we’re subsidising public infrastructure,” Murphy told The Irish News.

Murphy’s experience is echoed by many other landlords across the country. A survey cited in the article – conducted by the Irish Property Owners Association (IPOA) – found that 68 % of respondents expected to raise rents in the next 12 months to cover the higher rates and infrastructure costs. The article points out that the increase could have a ripple effect on tenants, especially small businesses that are already operating on thin margins.

There is also a broader policy dimension. The article links to a policy paper published by the Department of Finance, which argues that higher business rates are a “fairer way” of collecting taxes on property that is being used for commercial purposes, rather than on the land itself. The paper emphasises that this will ultimately reduce the need for future capital projects to rely on a patchwork of public‑private partnerships, which have historically been criticised for being opaque and costly.

However, critics argue that the policy fails to address the root cause of the funding shortfall: the way local authorities are funded. As the article notes, the National Development Plan (NDP) for 2023–2027 calls for €12.5 billion to be invested in local infrastructure, but the current revenue model from business rates is seen as insufficient to meet that target. The article also references a recent Irish Times piece that suggested an alternative: a dedicated infrastructure levy that would be levied on new developments rather than on existing commercial property. This, the Irish News suggests, would more directly target those responsible for building the infrastructure, rather than spreading the cost across all businesses.

One of the more surprising elements in the article is the discussion of the EU’s state‑aid rules. While Ireland is a member of the European Union, the current structure of business rates has not been examined in depth by EU regulators. The article quotes a lawyer from the European Court of Auditors, who warned that “if Ireland is perceived to be giving unfair advantages to certain sectors through differential tax treatments, this could be a potential violation of EU competition rules.”

In the end, the Irish News article presents a sobering view of a policy that, while well‑intentioned, may inadvertently shift the burden from the public sector to private landlords and ultimately to the tenants they lease to. The article closes with a call for a more balanced approach that acknowledges the historic under‑funding of local infrastructure while protecting small businesses from undue financial pressure.

Key Takeaways

The article underscores that a re‑imagining of how Ireland funds its infrastructure and planning system is needed – one that balances the needs of public investment with the realities of commercial property owners. Until such a shift occurs, landlords will continue to be the unlikely recipients of costs meant to underpin the very cityscape that houses their businesses.