Empty commercial property rates set to rise – landlords face fresh pressure from 2026

Landlords with empty commercial properties are facing rising costs from April 2026.

Properties with a rateable value of £500,000 or more will be subject to a higher business rates multiplier, potentially up to 10p in the pound above the standard rate.

These changes, which exclude some supermarkets and retail categories, could significantly increase holding costs for larger properties that remain vacant. For landlords, planning ahead has never been more important.

Currently, Empty Property Relief provides 100 per cent relief for the first three months after a property becomes vacant, and six months for industrial units. After this period, full business rates apply even if the property remains empty.

From 2025, the rules have tightened. Landlords must now show 13 weeks of continuous occupation before a new period of relief can begin. Previously, six weeks of temporary occupation was enough to restart the relief clock.

This change reduces flexibility and increases the risk of paying full rates on long-term voids. For example, a property with a rateable value of £100,000 at a 55.5p multiplier would face an annual bill of £55,500 once relief ends. Even a six-month vacancy could cost around £27,750.

For landlords managing multiple properties, these costs can add up quickly. Long-term empty properties in prime locations may become particularly expensive to hold, even if they generate potential income in the future. Understanding these rules now is essential to avoid unexpected financial strain.

The government’s consultation on transforming business rates revealed deep divisions. Over 70 per cent of local authorities called for stricter conditions and less generous relief, seeing Empty Property Relief as too lenient. At the same time, more than 60 per cent of real-estate respondents argued the opposite, demanding longer relief periods and lower empty-rates charges.

Critics of the current system argue that charging full rates on unoccupied properties discourages investment, punishes regeneration, and creates unnecessary financial strain on landlords, particularly during market downturns.

“When a property has no tenant and generates no income, taxing it as if it’s occupied is both unfair and counterproductive,” said one industry representative. “Instead of encouraging reoccupation, it often leads to delays in refurbishment, long-term vacancies, or even demolition to avoid ongoing costs.”

Higher multipliers can also have indirect effects on rent levels. The logic is simple: higher multipliers lead to higher total occupancy costs, which reduces tenant affordability and places downward pressure on achievable rent. Unless demand for space is exceptionally strong, higher business rates tend to suppress rent growth rather than drive it.

This adds another layer of risk for landlords. Even if a property is eventually let, higher rates may limit rental income, which can affect overall returns and investment strategy.

Properties near the £500,000 threshold could face a “cliff edge,” where a modest increase in rateable value pushes them into the higher multiplier category. Even small adjustments in rental values during revaluation could have a significant impact on annual rates bills.

The upcoming revaluation will set new rateable values based on rental levels in 2024. Landlords holding properties close to the threshold should review their portfolios carefully and consider the potential financial implications. In some cases, it may even make sense to explore restructuring or subdividing a property to reduce the risk of falling into the large-property multiplier band.

Councils also face challenges in administering Empty Property Relief under increasingly complex legislation. Many local authorities have already voiced frustration over inconsistent applications and the administrative burden of verifying genuine occupation.

The combination of higher multipliers, tighter relief rules, and rising vacancy costs looks set to reshape how investors and landlords view empty property. For some, it may even be the final push toward repurposing, subdividing, or redeveloping underused buildings to escape the growing rates trap.

While these measures are part of planned reforms, the autumn budget is expected to provide clarity on multipliers and any transitional arrangements. Landlords should monitor announcements carefully to confirm final rates and reliefs that could offset higher charges. Early planning can make a significant difference, especially for properties at risk of moving into the large-property band.

There are practical steps landlords can take to prepare for these changes:

1. Review properties near the £500,000 threshold and identify which assets could be affected by higher multipliers.
2. Plan for vacancies strategically and understand how long-term voids will impact rates.
3. Seek expert advice. Business rates consultants can help model potential scenarios, explore reliefs, and prepare budgets to reduce financial risk.

For some landlords, it may also be worth considering repurposing or redeveloping underused properties to reduce holding costs and create opportunities for income generation. Early planning allows time to explore options rather than reacting under pressure once bills arrive.

The changes may feel daunting, but preparation is key. By understanding the rules, monitoring upcoming budget announcements, and planning ahead, landlords can protect cash flow and make informed decisions about their property portfolios. With the right guidance, landlords can turn what might feel like a financial threat into an opportunity to review and optimise their property strategy.