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Future Outlook: Predictions for Business Rates and Commercial Property Market - December 2023 Perspective


December 2023 marks a significant time for the UK commercial property market. With the new year just around the corner, businesses are bracing for changes in business rates and assessing the impacts on the commercial property landscape. This article provides an informed perspective on what to expect in 2024, especially with the impending changes in transitional relief.


The Current Landscape

The aftermath of the COVID-19 pandemic has left an indelible mark on the commercial property market. The shift towards remote working has particularly impacted demand for office and retail spaces. As we approach the end of the year, the focus turns to the implications of the Autumn Statement 2023, where Chancellor Jeremy Hunt announced inflation-driven increases in business rates.

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Predictions for Business Rates as 2024 Approaches

1. Inflation-Driven Rate Increases


Following the Autumn Statement 2023, a rise in business rates is anticipated due to inflation. The Standard Multiplier is set to climb to 53.2p, aligning with the 6.7% CPI figure from September 2023. Businesses must prepare for these increased rates in their 2024 strategies.


2. Reforms in Valuation and Transitional Relief


The call for more frequent and accurate property revaluations is growing louder. This change is crucial to ensure business rates reflect current market values. Additionally, April 2024 will see changes in transitional relief, affecting how businesses adjust to rate changes over time. These reforms aim to create a more equitable and market-responsive system.


3. Expansion of Relief Schemes

To support businesses facing economic challenges and rising rates, the government is likely to enhance relief schemes. This could include broader rate relief thresholds and targeted support for industries most affected by economic changes.


Trends in the Commercial Property Market

1. Increasing Demand for Flexible Spaces

The trend towards flexible and hybrid commercial spaces is expected to continue into 2024. Businesses are seeking adaptable environments to suit evolving work patterns.


2. Technological Integration

Technological advancements in commercial properties, like smart buildings and sustainability innovations, will become more prevalent. These technologies will enhance functionality and increase property values.


3. Sustainability as a Priority

Sustainability will play a key role in the commercial property market. Properties with lower environmental impacts are set to be more attractive, driven by regulatory mandates and a societal shift towards environmental responsibility.


Economic Forecasts for 2024

The commercial property sector anticipates cautious growth in 2024. While challenges such as potential interest rate hikes and global economic uncertainties exist, there are also opportunities for innovation and adaptation.


As we move into 2024, the interplay between business rates, commercial property market trends, and broader economic factors becomes increasingly important. Businesses and investors must remain informed and flexible to successfully navigate the evolving landscape, especially with the upcoming changes in transitional relief and business rates.

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