Expert warns rising business rates will increase coworking costs

As the Autumn Budget approaches, businesses are anxiously anticipating potential reforms to business rates. The forthcoming changes could significantly influence the viability of coworking spaces, impacting their operations and the way clients utilize these environments. The Valuation Office Agency is set to release its draft business rating list by December 1st, and many businesses are bracing for a possible financial blow, with estimates suggesting a £1 billion increase in rates across UK high streets.

Expert Warns Rising Business Rates Will Increase Coworking Costs

One expert, Niki Fuchs, co-founder and CEO of Office Space in Town, emphasizes that coworking spaces could bear the brunt of the proposed reforms. She asserts that flexible office providers in London will be disproportionately affected. Under the new plan, offices valued over £500,000 will see sharper rate increases, severely impacting businesses in the capital.

Impact on London’s Coworking Spaces

In London alone, approximately 16,780 properties fall within this higher rateable value category. If rates rise dramatically, it is likely that coworking costs for members will also increase, potentially limiting access for many SMEs that rely on these services. Fuchs argues that the outcome of the Budget and the VOA’s listing will determine whether London’s flexible workspace sector can thrive or suffer due to outdated tax policies.

Concerns Beyond the Capital

The repercussions of potential rate increases are also being felt by coworking spaces outside London. Zoe Daines, who operates Freshmill in Haywards Heath, voices concerns regarding the potential escalation in business rates affecting her operation and other coworking ventures. Daines indicates that an increase could render services unaffordable for many small and medium-sized enterprises (SMEs).

Rethinking Business Rates

Business rates are traditionally determined by the rateable value of properties. Hospitality and coworking sectors are among those calling for reform. In July, Greene King’s CEO, Nick Mackenzie, advocated for a tax model based on profits rather than property values, arguing it could alleviate financial burdens for struggling businesses. Other retailers like Sainsbury’s have suggested that a 20% reduction in rates could generate over 17,000 new jobs.

• Current concerns surrounding business rates:
• Hospitality businesses demand a tax based on profits.
• Coworking spaces are predominantly located in high-value city centres.
• Retailers predict significant job losses without reform.

As industries grapple with varying needs, there is a collective desire for business rates to be reassessed. A freeze on current rates and targeted relief could prevent stagnation and closures across sectors. With the Autumn Budget looming, many await clarity on whether their voices have been heard in this vital debate.