Increased UK Business Rates Drives Growth in Flexible Office Sector
Since April 1st, business rates across the UK have increased the burden on small businesses significantly, forcing many to consider more flexible alternatives to traditional office leasing.
Business rates are applied to most non-domestic properties like offices, shops and warehouses and are recalculated every five years to reflect changes in the property market. It is calculated that the increase will mean the average micro-business employing fewer than 10 people, will have to pay £17,000 to cover business rates from April.
For businesses in London, some are expected to face business rate increases of up to 100%. It’s anticipated that London as a whole will see an increase of £9bn paid in business rates by 2022, directly limiting the ability for many businesses to grow under the changes.
A New Growth Driver for Coworking Spaces in the UK
Office space requirement have been changing as a result of technological innovation and flexible or remote work arrangements for quite some time. This significant and widespread change has been driving growth in the flexible office sector for the last five years.
This year sees British businesses swelling demand for flexible offices as a direct result of the budgetary increase in business rates and its negative impact on profitability. The strongest demand in the sector is now for smaller office units, open workspaces and high-spec managed offices that have flexible rental agreements and also eliminates liability for business rates altogether.
British Businesses Now Forced to Make Better Real Estate Decisions
The major influences on the future of the office market in the UK are not only the growing attraction of remote and collaborative working but increasingly affordability. This year will see a rising number of businesses reconsidering working practices, thereby accelerating growth in demand for flexible offices or coworking spaces.
However, real estate decisions made by British businesses need not just be about traditional ways of working. Coworking and other types of managed workspaces like Signature Works in Liverpool already enables businesses to have greater flexibility on location and tenure. Renting desks at a Signature Works locations can save around 80% on business overheads, allowing much more room for small businesses to operate as a result of improved margins.