Why Commercial Property Owners Should Pay Attention to the Business Rates Debate

The UK’s business rates system is under intense scrutiny, and if you own or manage commercial properties, this directly affects you. A coalition representing over 5,000 businesses is calling for a major rethink on proposed changes to business rates, arguing that the current plans could put undue pressure on high street retailers, office tenants, and industrial operators alike. If left unchallenged, these changes could impact occupancy rates, rental yields, and long-term investment strategies.

The Growing Push for Business Rates Reform

For years, commercial property stakeholders have argued that business rates are outdated and unfair, especially in comparison to the advantages enjoyed by online retailers who don’t face the same property-related costs. This issue gained significant momentum when over 70 major retailers—including Tesco, M&S, and Ikea—demanded a 20% reduction in business rates last year. Their argument? The retail sector alone contributes 7.4% of all business taxes despite only generating 4.9% of the UK’s economic output. The math simply doesn’t add up.

What This Means for Property Owners and Landlords

If tenants are struggling under the weight of business rates, landlords and property managers feel the impact just as much. When retailers and businesses can’t afford their space, vacancies rise, rental values decline, and investment in commercial properties slows. The British Retail Consortium (BRC) has already warned that unless substantial reforms are made, an estimated 17,000 retail spaces could shut down over the next decade.

In addition to retailers, office and industrial properties could also see shifts in demand. The Confederation of British Industry (CBI) reported that businesses across sectors are scaling back growth plans due to increased tax burdens. Nearly half of businesses surveyed plan to reduce their workforce, and two-thirds are cutting back on hiring—factors that influence office occupancy rates and demand for commercial spaces.

The Call for Fairer Business Rates

Morrisons’ CEO has been vocal about the need for a business rates overhaul, pointing out that traditional retailers are at a disadvantage compared to online competitors. The same concerns apply to landlords who lease to brick-and-mortar businesses. If the tax burden continues to rise, physical retail locations could become less viable, forcing tenants to downsize or close altogether.

How Can Commercial Property Owners Adapt?

Industry bodies and property associations are actively pushing for fairer business rates. Joining these efforts and advocating for change can help ensure commercial landlords’ concerns are heard.

With retail under pressure, mixed-use developments incorporating office, leisure, and residential spaces could offer more stability with a more diverse mix of tenants. 

For vacant properties, owners should explore mitigation strategies and other solutions to avoid full liability on empty property rates, easing the financial burden and allowing more leeway to find a tenant.

Considering energy-efficient upgrades and flexible leasing options can make properties more attractive to cost-conscious tenants and make investments more future-proof.

Key Takeaways

For commercial property owners, this isn’t just a retail issue—it’s a fundamental challenge affecting rental demand, property values, and long-term investment potential. With businesses struggling under tax burdens, proactive strategies and a strong industry voice are essential to securing a more sustainable business rates framework.

Now is the time to engage in the debate and ensure that future reforms work for commercial property stakeholders, not against them.