3 Asks of the Chancellor: Commercial Property Market
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Harry Downing explores the three policy changes that could strengthen the commercial property market, highlighting the need for certainty, simplicity and stability ahead of the Chancellor’s Budget.
When John Healey rises later this month to deliver his first Budget as Chancellor, every sector will be pleading for his attention. So let me save him some time… Commercial property needs three things, and none of them requires a cheque.
Finish the job on business rates
The April revaluation brought lower multipliers for retail, hospitality and leisure, and that was genuinely welcome. But someone must pay for it, and the bill has landed on the country’s biggest buildings.
Anything with a rateable value below £500,000 now pay 48p in the pound, with a reduced multiplier of 43.2p applying to properties with a rateable value below £51,000.
That is a curious way to encourage the essential warehouses and distribution units that employ people and keep goods moving. The cost won’t vanish; it will creep into rents and then into prices.
The Chancellor has promised wider reform. We would like it to be genuinely wider: simpler, more predictable, and not robbing Peter to pay Paul.
Leave capital gains tax alone
Since October 2024, gains on commercial property disposals have been taxed at 18% and 24%, up from 10% and 20%. Investors swallowed that and carried on.
Another rise would be harder to digest. Nothing has been announced, but the rumours alone are doing damage.
When owners fear the rules will change, they sit tight rather than look to sell. Deals stall, and capital that should be recycled into new space, refurbishment and energy-efficiency upgrades stays exactly where it is.
Confidence was returning to the investment market, and certainty costs the Treasury nothing.
Be fair to Holiday Lets
This might seem an odd entry on a commercial agents list, but in coastal and rural communities a well-run holiday let is a small business, generating economic activity by employing cleaners, tradespeople whilst driving footfall to cafes and pubs.
Since April 2025, the furnished holiday let regime has been increasingly taxed, taking with it the mortgage interest treatment, capital allowances and capital gains reliefs that recognised these properties as businesses.
I am not asking for the clock to be turned back. I am asking for a pause on further changes, and a proper look at whether commercial holiday accommodation deserves something better than the second home treatment.
The common thread here is stability, simplicity and certainty. Give investors and occupiers those three things and the market will do the rest. Mr Healey has said that his Budget will be built on fiscal discipline.
We would just ask that it be built on policy certainty too.
Harry Downing is an associate in the Commercial property team at Arnolds Keys.
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