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The research uses the established benchmark of the Quarterly MSCI UK Property Index, which contains £24.8bn of retail properties, £26.8bn of offices and £40.7bn of industrial & logistics. This provides valuation-based estimates of market rental growth, broken down by segment and location, over the three years to 1 April 2024 by sector.

The segments show very divergent patterns, a result of the impact of various broader movements on the differing property markets and geographies. In broad terms, logistics, driven by the growth of online retail and the move to greater inventories, has seen very strong rental growth; offices has seen positive, but very modest growth (behind inflation); and retail is still falling, albeit modestly and with a divergence between a relatively robust out-of-town and a more troubled in-town segment.

Within the following pages, we do not address likely value movement for properties valued with reference to build cost or profit (and this range of properties is extensive) however, we do anticipate:

Properties valued with reference to their land and build costs – likely to see above-inflationary increases reflecting a number of factors, primarily:

• Build costs, which according to BCIS have risen by approximately 19% over the three-year period since the last Revaluation
• Labour costs, where the Office for National Statistics points to a growth of 15-20% across the period

Properties valued with reference to their profitability – often linked to properties with a high degree of public interaction, 2021 values frequently reflected Covid restrictions and consequential trading impact. April 2024 values will reflect the post-Covid bounce back, which is likely to mean significant increases for many.

Forecasting liability

Understanding rateable value and multiplier movement is critical in forecasting likely movement in liability at individual property and portfolio levels.

The VOA will publish the Draft Rating List in late 2025, which will be the first time it publicly reveals its views on value levels at a local, regional and national level.

Until this stage, it is not possible to predict individual property values accurately. Instead, the following pages provide greater clarity in respect of likely trends in regional and national value movement and consequential rate multipliers using averages across a broad range of properties.

In summary, we forecast an overall weighted increase in value of 9.1% across the prime property classes: office, retail and industrial & logistics.

Notwithstanding the above, we anticipate that the overall % growth in the aggregate rateable value included in the Rating List to be greater than this, reflecting additional sectors not listed above and specifically those valued with reference to their build cost or profitability. As a result, we estimate that the overall increase will be in the range of 12.5%-15%.

The conclusions of our research are explored in more detail on the following pages.

Rate Multiplier

The current standard multiplier is 55.5p/£ (49.9p/£ where the RV is less than £51,000).

The Revaluation will rebase the multiplier to reflect national movement in rateable values.

The general principle in resetting the multiplier is that other than to reflect inflation, the process should be revenue neutral, ie Treasury collecting the same amount in real terms in 2026/7 as they had in 2025/6 (the last year of the 2023 Rating List).

Assuming an overall increase in Rateable Value of say 15% and reflecting current CPI inflationary levels we are predicting a standard rate multiplier of approximately 50p.

It is important to note that lower multipliers currently exist for properties with RVs below £51,000 and individual property liabilities will be impacted by reliefs and supplements; for 2026 there will be the added complication of differential multipliers.

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First, understand where your assessment might move to. Although draft values will not be made public until autumn, a preliminary review before then can highlight areas of likely concern.

Second, explore early opportunities to mitigate. Ideally, the system should not be complicated by reliefs and differential multipliers, but in reality, ratepayers should make sure they make the best use of them to their own advantage.

Finally, it is more important than ever to ensure the facts upon which the Valuation Officer has based their assessment remain correct. Until such time as the planned ‘Duty to Notify’ of physical changes to the property or its tenure is widely introduced from April 2029, the potential remains for rateable value to be based on historic, incorrect data. Ratepayers would be well placed to review their current valuations and ensure the best starting point for future reviews

The system will continue to change. With further statutory reforms and duties planned, this pace is only set to increase. Challenging as it is, the more that businesses do now to get ahead, the more manageable the impact of these 2026 changes will be, both in terms of the accuracy of bills and the time to forecast, prepare and mitigate for their impact.

DOWNLOAD THE 2026 HANDBOOK

DOWNLOAD THE 2026 HANDBOOK

DOWNLOAD THE 2026 HANDBOOK

DOWNLOAD THE 2026 HANDBOOK

As always, liabilities may change as a consequence of the Revaluation and wider Government initiatives. While this is a perennial challenge, volatile changes in property values between valuation dates and the introduction of differential multipliers make this a far more difficult exercise when it comes to the 2026 Revaluation. A number of factors beyond ‘normal’ inflationary movements will impact value and liability from April 2026, including:

Post-Covid bounce-back

• Return to the office amid ongoing structural shifts, higher environmental standards and accelerated obsolescence in the wider market.
• Improved trading compared to April 2021, particularly relevant for properties valued with reference to their turnover/profit
• Changing consumer behaviours and an ongoing move away from the high street
• The continued strength of the industrial and logistics market, albeit slowing somewhat more recently

Government Initiatives

Throughout successive Revaluations, many ratepayers have been calling for reform. The retail community has been at the forefront of this, primarily through the British Retail Consortium which has lobbied for reduced liabilities and a rebalancing across different property sectors (away from retail).

Responding to this pressure, while seeking to maintain the value of the overall revenue stream in inflation-adjusted terms, the 2024 Autumn Budget saw the Chancellor announce differential rate multipliers linked to both property value and sector.

The Government has now legislated for this and its Bill provides for:

• Differential rate multipliers
• Reduced rates for retail, hospitality and leisure properties of up to 20p/£ (approx. 40%) where RV is below £500,000
• Reduced retail rates funded by increased multipliers for all properties where RV is equal or greater than £500,000, up to maximum of 10p (approx. 20%)

Treasury is now grappling with whether to implement a hard cut off at £500,000, whether to exclude certain properties (for example schools and hospitals), and where to set the discounts and supplements while achieving revenue neutrality.

The fine details of the new approach are anticipated in the Autumn 2025 Budget, less than six months from new liabilities going live.

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Government currently collects approximately £30 billion per year in business rates. This is predicted to rise to almost £40 billion by 2029, driven by a mix of inflationary growth, new properties entering the rating list and, importantly, a reduction in reliefs – particularly in the retail, hospitality and leisure sectors. It is and will continue to be an important revenue stream for Government and therefore a key cost line for ratepayers.

Current business rates liabilities are based on the VOA’s opinion of rental values on 1 April 2021 (expressed as a Rateable Value – RV); these came into force two years later in April 2023 (the 2023 Revaluation). The 2026 Revaluation will rebase all Rating assessments, reflecting April 2024 market values; a process designed to ensure that rate liabilities are closely aligned to economic and occupational market conditions.

Next year’s Revaluation, which is expected to maintain similar revenue levels for Government rebased for inflation, has the potential to materially change ratepayer’s liabilities given the redistribution of burden across sectors and geographies.

Notwithstanding the above, we anticipate that the overall % growth in the aggregate rateable value included in the Rating List to be greater than this, reflecting additional sectors not listed above and specifically those valued with reference to their build cost or profitability. As a result, we estimate that the overall increase will be in the range of 12.5%-15%.

The conclusions of our research are explored in more detail on the following pages.

 

 

We created this handbook to help businesses navigate the upcoming 2026 Business Rates Revaluation with clarity and confidence.

Whether you’re a property owner, occupier, or advisor, this guide outlines what to expect from the revaluation process, how rateable values are assessed, and the practical steps you can take to prepare. Our aim is to ensure you’re well-informed and equipped to manage your business rates effectively.

Why Montagu Evans?

Established over one hundred years ago and operating nationally, Montagu Evans is one of the UK’s largest providers of Rating consultancy advice. Our 40-strong team prides itself on our longstanding client relationships and our reputation both within our market and amongst our peers. We are active contributors to key industry bodies, headed by Josh Myerson (Chair of the RICS Rating Diploma Section and Past President of the Rating Surveyors’ Association). Technical excellence is at the heart of how our partnership works. A significant number of our team are RICS Rating Diploma holders, the ‘gold-star’ qualification in rating practice and procedure, and both HM Treasury and the Valuation Office Agency seek our input on operational and policy matters.

NAVIGATING THE HANDBOOK

There are three ways to view the handbook:

1. Click the box below to open the PDF
2. Download the PDF within the above method and read in your own PDF viewer or by printing
3. View online by navigating the chapters

We hope you find this helpful, and if you have any further questions, talk to our experts here.

Although only three years since the last Rating Revaluation, April 2026’s new Rating List is expected to provide some dramatic changes in individual property valuations. This, together with fundamental changes in the approach to business rate multipliers, is likely to have a material impact on annual rate liability for many of the UK’s businesses.

Occupying or owning property is expensive, often one of the largest financial commitments for any business. Contentious and increasingly onerous, business rates remain a major and complex element of the overall cost of occupation.

From 1 April 2026, businesses are facing potentially large changes in this liability (both up and down), but with limited ability to plan ahead accurately. This impact can be serious: forecast too high and valuable resources will be diverted from growth/investment decisions; pitch too low and an unavoidable cost will sit in the corporate P&L.

This uncertainty is never welcome, especially in our current challenging global economic environment. The position will only be fully clear as we move toward the end of 2025, giving ratepayers less than six months to meaningfully prepare.

But anticipating future movement and thinking now about how to mitigate the potential impact can significantly support businesses’ forward planning.

With this in mind, Montagu Evans has undertaken a review of market activity to provide greater clarity on the likely direction of valuations.

This report provides a high-level view of how values and liabilities may be impacted and what businesses should do now to best prepare themselves before the end of March 2026.

It focuses on the three main property asset classes: retail, office and industrial & logistics. Impacts will vary considerably for each, reflecting not just the nature of each property but its location. The final details are yet to be confirmed, but some may benefit from falling rate liabilities, while others, particularly occupiers of larger properties, could see very significant increases.

We also include an overview of the Government’s timeline, background on the likely changes, advice from our sector experts and a checklist to help prepare.

On top of this, we would encourage businesses to speak to our business rates specialists to (a) better understand next year’s impact on their particular circumstances and (b) develop appeal strategies to identify and challenge liabilities at the earliest opportunity.”

London’s residential development industry is facing significant challenges, with housing starts at record low levels in recent months. Even though national activity levels are also at a low ebb, the capital stands out as an outlier.

Montagu Evans’ first residential land survey highlights that the introduction of the Building Safety Act, particularly the Gateway 2 approval process for taller buildings, is playing a major role in these trends. Viability and planning concerns are also contributing to the current pause in activity.

This report explores these findings in detail, providing valuable insights into the factors shaping the market.

THE BACKGROUND: UK housing data

The past year, 2024, saw only 107,710 starts on new housing in England, the lowest figure on record except for 2008 and 2009, at the height of the global financial crisis, when only 106,890 and 85,610 homes were started, respectively.

But these nationwide figures obscure how bad the situation is in London, where work started on just 6,330 homes. This is not only 62% below the 10-year average (compared to 30% for England as a whole), but also represents the worst year on record, including during the Global Financial Crisis and the Covid-19 pandemic.

Perhaps most worryingly, it is 36% below the next worst year on record, back in 1990, when the housing market was going through its most dramatic post-war crash. It is even 36% below the 2019 figure of 12,420, which was a 24-year record low. Bear in mind that the annual target for new home completions in London is 88,000 a year or 22,000 per quarter.

As shown in the graph below, the first quarter of 2025 saw only 1,110 starts in London, meaning that the total for the 12 months to the end of March was just 3,990 – the lowest figure for any 12-month period on record, and by some margin.

Our analysis of the data shows that London’s problems also began earlier than in the country as a whole.

The chart above shows rolling annual housing starts for England (excluding London) and London, on separate axes so that the trends can be easily compared. Both were on an upward trend until the GFC, but it was much more marked in the capital. And unlike in the rest of the country, this generally continued even through that difficult period between 2007 and 2012.

However, since around 2015, apart from a short-lived boom after the end of Covid restrictions, the trend in London has been downward. In the rest of the country, apart from during the pandemic, it remained on an upward trajectory until much later (2023) and has not fallen as sharply or as far; indeed, the most recent set of data appears to suggest it has reversed.

Reports from London residential development data specialists Molior suggest that the figure could fall even lower in Q2; their visits to 800 development sites showed that only seven had seen construction starts, meaning the figure for the first half of the year could be just 2,000. The only chink of light is provided by planning application activity, which seems to be showing signs of increasing.

INSIGHTS FROM THE RESIDENTIAL LAND SURVEY

So, what are the reasons for starts falling to such a low level? Montagu Evans’ first Residential Land Survey, carried out in March and April of this year and involving 56 developers, housebuilders and registered providers mainly active in London and the South East, gives some indications of what the problems are.

When asked what was causing delays to projects, the most common issue was the Building Safety Act (48% of respondents), followed by Viability (46%) and Planning delays (36%). Weak buyer demand (16%) was also a factor for some.

 

The main issue with the former appears to be the Gateway 2 process, which requires detailed plans for buildings over 18m to be submitted to the Building Safety Regulator before work can start.

Recent figures from the Health & Safety Executive show that of 187 applications submitted through the Gateway 2 process, only 20 have been approved and 18 rejected, meaning 149 remain undecided.

These blockages – and the impact of the need for a second staircase on viability –  perhaps explain why 73% of the respondents said they were focused on “medium-rise flats” or six storeys or less, which avoid the need for such detailed scrutiny.

However, there are few sites available where this development would be appropriate, particularly in inner London. So, this may explain why the slow progress on existing sites and the difficulty in finding new appropriate ones have been particularly marked in the capital.

Viability, named by 46% as a barrier, is a problem across a wider range of locations and development types, and reflects the market being hit by three factors: an increase in construction costs, significantly higher debt costs, and weaker buyer demand caused by higher mortgage rates. In London, in particular, the additional regulatory, design and construction costs now associated with taller flatted blocks is a further issue.

There does appear to be some mild downward pressure on pricing, too, complicating viability further. ; while the largest slice (54%) say prices are not changing, more (25%) say they are slightly decreasing than increasing (13%). However, only 16% explicitly named weak buyer demand as a barrier, behind the longstanding complaint of planning delays (36%).

In response to this picture, most respondents (52%) are looking for sites that can be immediately developed, whereas 36% are seeking land for the medium term (2-3 years). This polarisation means that sites are sought either on an unconditional basis or with planning risk.

In short, viability, demand and planning issues appear to be affecting all forms of development, although they appear to be less dramatic for suburban-style family housing. The build-to-rent market has also moved towards these types of schemes rather than urban flats.

London’s more severe problems relate to the combination of building safety issues with these factors – the capital’s housing pipeline is disproportionately in larger sites and in higher-rise formats.

So while activity in London has been low for some time, it is now no exaggeration to say it is in a crisis. Unless this reverses quickly, it does long-term damage to supply chains, making it harder for the industry to bounce back when conditions improve.

The Government has said it is introducing steps to increase the speed of decision-making within the Building Safety Regulator, but this is likely to take time to have an effect. There are, however, reforms to planning underway that may also help improve the situation.

The impact of planning legislation

Their Government is clearly taking the crisis seriously and is bringing in more measures, including those outlined in the Planning and Development Bill, which will help to ease planning delays and bring more land forward for development. Higher levels of funding for Local Planning Authorities will gradually feed through to faster decision-making.

London Mayor Sadiq Khan has announced that he will “actively explore” whether homes can be built on appropriate sites in the green belt, and there are signs that the GLA will be more flexible on affordable housing requirements, a major contributor to viability issues.

Consultation on Towards a New London Plan has just ended. This iteration of the plan sets out the potential direction of travel for the new London Plan, which is expected to be published for consultation in 2026. The plan covers a 10-year period during which 880,000 new homes are targeted for delivery, which is significantly higher than previous targets. The emerging plan considers a range of areas where this growth can be accommodated, including a brownfield first approach, Opportunity Areas, Central Activities Zone, town centres/high streets, industrial land, urban and suburban London, particularly along transport corridors, review of green belt and utilisation of grey belt land. To encourage greater densification of development, the emerging plan also commits to a review of density and bespoke design policies such as the dual aspect requirement, with reliance instead upon national standards or building regulations.

To support and encourage this level of delivery, the emerging plan will look to streamline planning decisions and improve the consistency of decision-making across the Boroughs. A review of the threshold approach to affordable housing is also proposed, potentially alongside greater emphasis on the delivery of social rented homes and utilisation of alternative forms of affordable housing such as Key Worker.

Lower inflation and debt costs will also help to ease the situation, although ultimately, in some locations, the only thing that will unblock new housing is a higher level of grant funding.

Residential:Connected: AN Offering to Navigate These Challenges

As alluded to in our mid-year market update, despite the challenges, the sector remains resilient, underpinned by strong demand fundamentals and ongoing opportunities for innovation and growth. The need for the right expertise and connected strategic approach is important to help landowners, investors, and developers successfully navigate this evolving landscape and capitalise on emerging market trends.

A connected approach to Residential could prove to be the answer, with the ability to navigate this complex landscape requiring a deep understanding of market trends, emerging risks, and strategic opportunities in a connected way that is easy to navigate and find the needed expertise. Residential sector connectivity allows organisations to work closely with landowners, investors, developers, and local authorities to navigate these complexities, ensuring resilience and long-term success in an ever-changing market.

At Montagu Evans, we utilise this approach with “Residential:Connected”, which revolves around seamless integration of our experts, ensuring our clients can easily access the specific expertise they need; driving the creation of resilient and thriving Residential communities. Learn more here.

 

The Montagu Evans Residential Land survey covered 56 businesses active in the land market, with 70-84% active in London and some 66% active in the South East. It represented a mix of those involved in build-to-rent (61%) and private sale (64%), with many also involved in student accommodation (45%). The survey work was carried out in April and early May 2025. Learn more about our research & insight services.

*This research has been prepared for general information purposes only. It does not constitute any investment, financial or other specialised advice or recommendations, and you should not, therefore, rely on its contents for such purposes. You should seek separate professional advice if required.