BLOGS

Introduction

April 2026 marks the latest business rates revaluation in England and Wales, updating rateable values to reflect market rents as of 1 April 2024. For commercial property landlords and tenants, this revaluation arrives during a period of considerable market flux—rising operational costs, evolving work patterns, and sector-specific pressures have reshaped rental values unevenly across the UK.

With the government now committed to three-yearly revaluation cycles, property stakeholders must adapt to more frequent adjustments. The 2026 changes will redistribute billions of pounds in business rates liability, creating winners and losers across different property types and geographies.

How the 2026 revaluation works

The Valuation Office Agency (VOA) assesses commercial properties based on their estimated rental value at the antecedent valuation date (AVD)—in this case, 1 April 2024. The resulting rateable value determines business rates liability when multiplied by the relevant multiplier set by the government.

Properties that have seen rental growth since the previous valuation (which used April 2021 values) will face higher rateable values and, consequently, increased rates bills. Conversely, properties in sectors where rents have declined may see reductions.

Transitional relief schemes typically cushion the impact of large increases over several years, though the precise arrangements for 2026 remain subject to government confirmation. Landlords and tenants should factor potential phasing into their financial planning.

Sector impacts: industrial strength, retail relief

Industrial and logistics

The industrial sector has experienced sustained rental growth since 2021, driven by e-commerce demand, supply chain reshoring, and limited new supply in prime locations. Warehouse and distribution properties in key logistics corridors—particularly the Midlands, the North West, and areas surrounding major ports—are likely to see rateable value increases of 20–40% in many cases.

For tenants on leases where business rates are passed through, this translates directly into higher occupancy costs. Landlords may face pressure to adjust headline rents or offer incentives to offset the rates burden, particularly in competitive submarkets.

Retail

High street retail presents a more nuanced picture. Many town centre locations have seen rental values decline or stagnate since 2021, reflecting ongoing structural challenges and reduced footfall. Some retailers may benefit from lower rateable values, providing modest relief to stretched margins.

However, prime retail pitches in thriving city centres and out-of-town retail parks with strong trading may see increases. The divergence between prime and secondary retail locations continues to widen.

Offices

Office markets remain in transition. Central London and major regional cities have seen varied performance, with best-in-class sustainable buildings commanding premium rents while older, less efficient stock faces valuation pressure. The 2024 AVD captures a market still adjusting to hybrid working patterns, creating a mixed revaluation outcome for office landlords.

Implications for landlords and investors

Commercial property investors should review their portfolios ahead of the new rating lists taking effect. Key considerations include:

• Lease structures: Where tenants bear rates costs, significant increases may affect tenant covenant strength or prompt lease renegotiations.

• Investment yields: Higher rates liabilities can compress net effective rents, influencing capital values and yield calculations.

• Development appraisals: For new schemes, projected rates costs should reflect post-revaluation assumptions rather than historic levels.

Understanding local market dynamics is essential. While national trends provide a framework, rateable values ultimately reflect property-specific and location-specific rental evidence. Accessing granular market data—including comparable rents, vacancy rates, and recent transactions—enables more accurate forecasting.

Navigating the transition

Landlords and tenants have the right to challenge rateable values they believe are incorrect through the VOA's Check, Challenge, Appeal process. Given the volume of appeals following previous revaluations, engaging early with rating advisors is prudent.

For residential-focused investors considering mixed-use or commercial diversification, the rates landscape adds another layer of due diligence. REalyse data on local market conditions, planning pipelines, and demographic trends can inform decisions about where commercial and residential demand intersect—helping identify locations where occupier demand remains robust.

Outlook

The shift to three-yearly revaluations means rateable values will more closely track market movements going forward, reducing the sudden adjustments that characterised longer revaluation cycles. For commercial property stakeholders, this demands ongoing attention to rental trends and market positioning.

As April 2026 takes effect, those who have prepared—reviewing valuations, stress-testing tenant affordability, and understanding local market dynamics—will be best placed to manage the transition. In a commercial property market defined by sectoral divergence and geographic variation, data-driven insight remains the foundation of sound decision-making.