Market Insights · By Martin Levy · 29 May 2026
The cheapest-looking rent in a London office building can quietly become the most expensive deal in it. Since 1 April 2026, the new business rates revaluation has been live, and occupiers across Central London are opening bills that are sharply higher than the ones they budgeted against. The number that won the building over — the headline rent, softened by a generous rent-free period — was only ever part of the cost. The rest arrived this spring, and for most occupiers it arrived without warning. The uncomfortable truth is that the agent who negotiated the deal had little commercial reason to mention it.
The Levy Group London acts for commercial tenants only — never for landlords. My work begins where most agents’ interest ends: the total cost of occupying a building over the life of the lease. Forty years on the occupier’s side of the table, across more than 500 projects, and the pattern this year is familiar. The deal looked good on rent. The deal looks very different now the rates are on it.
What changed on 1 April
The 2026 revaluation took effect on 1 April. It resets the rateable value of every commercial property in England against more recent rental evidence — and in Central London, that evidence captured a market that had moved.
On Colliers’ analysis (John Webber, head of business rates), prime Central London office occupiers face an additional £432m in rates liability, taking the collective bill to £5.23bn. The headline average rise is 9%, but the average hides the real story. Of 27 Central London areas assessed, 22 went up and only 4 came down. The increases cluster exactly where occupiers most want to be:
- Farringdon: rateable value per sq ft rising from £29.38 to £40.64 — a 38% jump, driven largely by the Elizabeth Line.
- Waterloo: up 25%.
- Mayfair: up 23%.
- Holborn: up 20%.
There is also a supplementary multiplier of up to 10p now applying to roughly 3,350 higher-value buildings — those with a rateable value above £500,000. And occupiers who moved in 2024, against a stronger rental backdrop, are seeing assessments 68–80% higher than those struck in 2023. Where you sat in the cycle when your lease was agreed now has a direct, multi-year cost consequence.
Why your agent didn’t mention it
This is not an accusation — it is a description of how the market is paid. Full-service and landlord-side agents earn their fee on headline rent and on the incentives that close the deal: the rent-free months, the fit-out contribution. Those are the levers a letting agent is incentivised to talk about, because they are the levers that get the lease signed.
The rates bill, the service charge, the dilapidations exposure — those land on the tenant, often long after the fee has been invoiced and the agent has moved on to the next instruction. There is no dishonesty in this. There is simply no commercial reason for the person on the other side of the table to lead with the cost that arrives after completion. The 2026 revaluation has made that silence expensive.
Total occupancy cost versus headline rent
Headline rent is the number everyone negotiates. Total occupancy cost is the number you actually pay.
For a Central London office, the headline rent is frequently only 60–70% of the true annual cost of being in the building once rates, service charge and ancillary liabilities are included. The City prime rent is currently £130.80 per sq ft (SHB Real Estate, Q1 2026) — but layer on a rateable value that has just risen 9% on average, more in the sharper submarkets, plus the supplementary multiplier on higher-value space, and the gap between the number you negotiated and the number you pay widens materially.
Headline rent is the number everyone negotiates. Total occupancy cost is the number you actually pay.
The discipline that protects occupiers is simple to state and rarely done well: model the fully loaded cost per desk, per year, over the full lease term — including the revaluation already in force — before heads of terms are agreed. Rateable value is knowable in advance. Almost nobody models it before they have committed.
Using revaluation exposure as a negotiating lever
A higher rates assessment is a cost — but in a negotiation, a known cost is also leverage.
Where revaluation has pushed a building’s total occupancy cost well above its headline rent, that exposure is a legitimate point of negotiation: on the rent-free period, on the fit-out contribution, on the timing and structure of the next rent review or break. Landlords competing for good covenants understand this. An occupier who arrives at heads of terms already modelling the post-revaluation number negotiates from evidence, not from hope — and tends to recover, in incentives, a meaningful share of what the revaluation has added.
The condition for using the lever is having it in hand before you commit. After signature, it is gone.
If you have a lease event in the next 24–36 months
If your lease has a break clause, an expiry or a rent review falling within roughly the next two to three years, the revaluation changes your planning horizon now — not when the event arrives.
It affects what your current building genuinely costs you today, what a move would cost on a fully loaded basis, and where the negotiating room sits. Occupiers who begin modelling 18–24 months ahead of a lease event consistently negotiate from a stronger position than those who start when the clock is already running. The work that protects you is done early, quietly, and well before anyone needs to decide anything.
The tenant-only advantage
The Levy Group London acts for occupiers only. I never represent landlords, and I never take a landlord-side fee — which means there is no deal I am quietly incentivised to push you towards, and no cost I have a reason not to mention.
That single structural fact is why total occupancy cost, rates exposure and the post-revaluation number are central to how I advise, rather than a footnote after the lease is signed. I have spent my whole career on one side of the table only: the tenant’s. The 2026 revaluation has not changed that approach. It has simply made it more valuable. It is the same discipline behind my tenant representation work.
Frequently asked questions
When did the 2026 business rates revaluation take effect?
It came into force on 1 April 2026, resetting rateable values across England against more recent rental evidence. Central London office occupiers are seeing an average increase of around 9%, with some submarkets considerably higher.
Which London areas were hit hardest?
Of 27 Central London areas assessed, 22 rose and 4 fell. Farringdon saw the steepest increase — rateable value per sq ft up around 38% (from £29.38 to £40.64), driven largely by the Elizabeth Line. Waterloo rose roughly 25%, Mayfair 23% and Holborn 20%.
What is the supplementary multiplier?
It is an additional charge of up to 10p applying to higher-value properties — broadly those with a rateable value above £500,000, affecting around 3,350 buildings. For larger occupiers it can add a material amount to the annual bill.
Can I appeal my business rates assessment?
There is a formal Check, Challenge, Appeal process. Whether an appeal is worthwhile depends on the evidence behind your specific assessment. The more immediate opportunity for most occupiers is using known rates exposure as leverage in lease negotiations, where the gains can be larger and faster than an appeal.
Why didn’t my letting agent flag this when I signed?
Landlord-side and full-service agents are typically paid on headline rent and on the incentives that close a deal. Rates, service charge and dilapidations fall on the tenant after completion, so there is little commercial reason for the other side of the table to lead with them. A tenant-only adviser has no such conflict.
I have a lease event coming up — when should I start planning?
Ideally 18–24 months ahead. Occupiers who model their fully loaded cost — including the revaluation now in force — well before a break, expiry or review consistently negotiate from a stronger position than those who start once the event is imminent.
Negotiating a London office lease, or facing a break or review between now and 2030? Before you sign, find out what the building actually costs once the 2026 rates are loaded in. An hour with me, no fee, no obligation — straight tenant-only analysis of your total occupancy cost and where the negotiating room really sits. Call me on +44 7968 191 233 or email martinl@thelevygroup.london.
The Levy Group London — Trusted, Valued, Respected. Independent commercial lease consultancy for London tenants, led by Martin Levy. Over 40 years of experience. More than 500 completed projects. 100% tenant-only — always.
Sources
- Colliers, London Offices 2026 Revaluation Impact (John Webber, Head of Business Rates) — colliers.com
- Workplace Insight, Business rates hike could cost London office occupiers £432 million more from 2026 — workplaceinsight.net
- FMJ, Central London office business rates set to surge says Colliers — fmj.co.uk
- House of Commons Library, Business rates: the 2026 revaluation — commonslibrary.parliament.uk
- SHB Real Estate, Q1 2026 London office rents & business rates — shbre.co.uk
