Business rates reforms and the impact on the UK flexible office sector
Owen Spencer, Counsel in the commercial real estate team at Forsters, has been quoted in Bisnow regarding the impact of business rates reforms on the UK’s flexible office sector.
The industry is currently facing significant challenges caused by the shift in how flexible offices are assessed for business rates. The Valuation Office Agency has moved to treating serviced offices as single units of assessment, rather than on a desk-by-desk basis. This move to building-level assessments, coupled with the 2026 revaluation and higher multipliers for larger properties, has resulted in an increased tax burden for flex operators.
Owen observes that these rising costs put operators is a difficult situation – them must decide whether to pass this on to their customers or absorbed them. He highlights that the sector reliant on startups and small-to-medium sized enterprises (SMEs), which often operate with lean margins. Owen warns that if these tax rises are passed directly through to end users, these cost-sensitive businesses might find elsewhere to go.
While some may view these reforms as simply closing a loophole, Owen suggests the move could be “counterproductive” for tax authorities if the unintended consequences “strangle growth” and create a smaller market for the tax to apply to.
Read the full article in Bisnow here. (Paywall)
