2023 Business Rates Revaluation

From the 1st April 2023, the VOA’s (Valuation Office Agency) business rates revaluation came into effect for all UK commercial properties. The revaluation compounded the current economic and geopolitical turmoil, having a negative effect on tenants of commercial space across the UK.

In general, the office and industrial sectors will experience an increase in rateable values as they take on more of a tax burden, whilst the retail and leisure sectors will see a decrease in their rates, reflecting the shifts in demands and achievable rents the UK commercial property market has experienced since the last revaluation in 2017.

On average in 2023 and 2024, tenants of commercial space in England and Northern Ireland will be paying over 10% more in business rates under the new revaluation, whilst offices located in Wales and Scotland will pay between 4-6% more. There is, however, a large variation across individual markets and submarkets and therefore will impact some occupiers more than others.

Outside of London, the majority of the major office markets are seeing increases in their rateable value, with the largest changes occurring in key South East markets such as Oxford and Cambridge, as well as Reading and Watford, with an average increase of over 35%. With more accurate rental information, office occupiers in Edinburgh and Glasgow are also experiencing some of the largest increases in rates liability, with both locations seeing more than 30% rises. In contrast, offices in central Manchester, Liverpool, Bristol and Basingstoke are some of the key office markets benefitting from the revaluation with reductions in their rateable values.

In London, changes in rateable values are similarly varied across the submarkets, as shifts in occupiers’ office demands and commuting habits are reflected in the revaluation. For instance, the more traditional core locations such as the City Centre, Mayfair, Paddington and Canary Wharf are among those seeing a reduction in business rates. On the other hand, markets with notable increases include Soho, Clerkenwell and Farringdon, and Whitechapel, which have experienced the largest rental gains in the Capital over the past few years.

The industrial sector is experiencing the largest impact from the 2023 revaluation. All major industrial markets across the UK are seeing significant increases as the demand for industrial units continues to drive considerable rental growth throughout the sector. Overall, rateable values in England are 38% up on the previous business rates cycle, whilst increases in Scotland, Wales and Northern Ireland are closer to 10%. These increases are expected to add further pressure to manufacturing occupiers in particular, as the costs for materials, labour, and energy continue to rise.

The April 2023 rateable revaluation reflects the accelerated trends experienced throughout the UK’s commercial property market as we move into a post pandemic world and attempts to redistribute the property tax burden in line with the ever-changing market shifts. Much like the impact of these shifts, the revaluation is highly varied across each sector and within each individual market.

With the impacts highly varied across each sector and within each individual market, we are on hand to offer advice. Contact our team today to find out how the business rates revaluation will impact your business.