BCO says reported £1bn business rates rise would make London office viability almost impossible

The British Council for Offices (BCO) has warned that a reported £1bn business rates increase on commercial buildings valued above £500,000 would make office development viability in London almost impossible, days before the Budget on 28 October.

BCO chief executive Samantha McClary said reports suggest the Chancellor is considering the measure. The BCO said it would affect about 9,000 properties across London and the South East, with the City of London and Canary Wharf most affected.

HM Treasury's release confirming the Budget date, published on 31 July, made no mention of business rates.

McClary said the companies that would pay the bill are national and international employers. "London competes for their headquarters with New York, Singapore and Dubai, not with Manchester. Make it dearer to be here and that investment doesn't move north. It moves abroad," she said.

The BCO's case

The trade body, whose members are organisations involved in creating, acquiring or occupying office space, said demand for London offices is not the problem. According to the BCO, vacancy in the City and West End is below 1% and grade-A buildings took a record 93% of Central London leasing last year.

Delivery is the issue, the BCO said. It said only one tall building will complete in London this year, the slowest year since 2015, and almost half of Central London's 2026-30 pipeline has yet to start on site. The BCO cited Turner & Townsend's estimate that the cost of developing a new office building in London has risen by up to 40% since 2020.

Turner & Townsend's 2026 tall buildings report, which compared the cost of building skyscrapers in London, New York, Seoul, Tokyo, Mumbai and Dubai, carries the 40% figure. The statement on London completions and pipeline is the BCO's own.

McClary said that if the plan appears in the Budget it would deliver the opposite of growth. She also said the sector cannot simply refuse the tax and must provide hard evidence on productivity, regeneration and jobs if it wants government to treat offices as critical infrastructure.

Existing rates burden

The BCO said larger properties already pay a higher rates multiplier, which it described as introduced in April to fund relief for the high street, and that a revaluation has pushed many office bills up on top of that.

GOV.UK figures for the 2026 to 2027 tax year show properties in England with a rateable value of £500,000 or more pay a multiplier of 50.8 pence, against a standard multiplier of 48 pence for non-retail properties with a rateable value between £51,000 and £499,999. GOV.UK said the lower retail, hospitality and leisure multipliers replaced the rates relief that applied to those sectors in 2025 to 2026.

Property band (England, 2026-27)	Multiplier
Standard (non-retail, hospitality and leisure), rateable value £51,000 to £499,999	48p
Rateable value £500,000 or more	50.8p

The Valuation Office Agency said the 2026 rating lists took effect on 1 April 2026.

The Budget

HM Treasury confirmed on 31 July that the Budget will take place on Wednesday 28 October 2026. Chancellor of the Exchequer John Healey said it would be his first Budget as Chancellor and that it would meet the government's fiscal rules.

"This will be a Budget that moves money and power out of Westminster, and into every postcode around Britain," Healey said. McClary opened her piece by referring to the "every postcode" line, saying the office sector would happily sign up to it.

McClary has been BCO chief executive for about 18 months. The BCO announced on 6 March 2025 that the former EG editor would take up the post from 6 May 2025, succeeding Richard Kauntze, who had led the organisation for more than 25 years.

The Budget is due on 28 October.