Business rates changes soften blow for warehouse sector - Savills

Recent changes to business rates have brought greater clarity for the UK warehousing sector, following months of uncertainty ahead of the government’s autumn Budget and the publication of the draft 2026 Rating List.

Speculation had centred on the potential introduction of a substantial ‘large property supplement’ and the impact of rising rateable values on logistics and distribution assets, particularly larger warehouse units. With industrial property having seen significant rental growth in recent years, the revaluation was widely expected to result in sharp increases in liabilities.

The draft 2026 Rating List shows that average rateable values for warehouses have increased by 21% in England, 23% in Wales and 13% in Scotland. However, annual multipliers—the figures used to calculate rates bills—have reduced in England and Wales by more than many had anticipated, partially offsetting the increase in rateable values. In Scotland, the reduction in multipliers was less pronounced.

One of the most closely watched proposals was the introduction of a ‘large property supplement’, initially feared to add as much as 20% to rates bills for properties above certain thresholds. The final supplement has been set at 5.8% in England and 2.8% in Wales—considerably lower than anticipated.

Transitional relief measures have also been introduced across England, Wales and Scotland to moderate the immediate impact of increases. In England, despite the average 21% uplift in warehouse rateable values, the typical rates bill increase will be capped at 8.67% in 2026/27.

That said, properties that experience significant rises in rateable value may face above-inflation increases in subsequent years, with higher liabilities potentially extending into 2027/28 and 2028/29 as transitional relief unwinds.

The new system has also introduced additional complexity, with 19 possible levels of annual multiplier across England, Wales and Scotland for 2026/27, compared with nine in the previous rating year.

For a sector that plays a critical role in national supply chains and economic performance, the overall outcome has been described as manageable, though many operators argue that the final settlement does little to actively support a market already navigating cost pressures, regulatory change and ongoing economic uncertainty.

Businesses are also being reminded that the deadline to appeal against existing 2023 List rateable values is 31 March 2026. The window to challenge new 2026 List assessments will open on 1 April 2026.

With revaluation now confirmed, warehouse occupiers and investors are turning their focus to cost forecasting and portfolio reviews as the new regime comes into effect.