Autumn Budget 2026 offers steadier ground for property, with reform still to come

Chancellor John Healey’s first Budget was a cautious package for property and business. It brings targeted rates relief for smaller high street occupiers, fresh support for housebuilding and regional regeneration, and fiscal plans built to reassure rather than surprise.

Reassurance is in high demand, being announced a day after BTG’s Red Flag Alert research recorded 738,144 UK businesses in significant financial distress – the highest figure since the research began in 2004.

Writing in Business Weekly last week, Luke Tillison, Managing Director and Head of Transactional, argued that the Budget’s driving theme had to be business confidence. He said that meant credible fiscal plans rather than “a suite of short-term ‘sticking plasters’”. With that in mind, Healey’s offering is mixed but moves in the right direction.

High streets and business rates

In his predictions piece, Luke called for “wholesale reform of the out-of-date régime” rather than successive reliefs for selected sectors. The Budget leaned towards the latter:

• The small business rate relief threshold for retail, hospitality and leisure rises from £12,000 to £18,000 from April 2027, taking around 70,000 businesses out of rates.
• Pubs, music venues and social clubs in England get a 20 per cent cut in their business rates bills.
• Mayoral authorities will keep 20 per cent of locally collected rates from next year, rising to full local retention by 2030.

The relief will be welcome, but Luke is not alone in wanting more. Several rating specialists have also questioned why occupiers outside of retail, hospitality and leisure, including industrial and logistics businesses, have been left out.

Manufacturing and productivity

Luke and Healey almost aligned with their respective predictions and proposals. He argued for generous allowances on machinery, equipment and premises upgrades to help bring manufacturing home. Healey has maintained full expensing and moved to raise the main rate first-year allowance from 40 to 50 per cent from 1 January 2027.

With the writing-down allowance falling from 14 to 12 per cent in April 2027, the incentive is to invest sooner rather than later.

Decarbonisation and sustainability

More than £85 million will upgrade the Offshore Renewable Energy Catapult’s facilities in Blyth to test next-generation wind turbines.

Refurbishment works still attract VAT while new-build homes are zero-rated, which feels like a missed chance to back the buildings we already have. Electricity at public EV chargers will also move to the standard VAT rate from 1 November.

For business occupiers, the changes to capital allowances offer more practical help. Full expensing and the higher first-year allowance reduce the upfront cost of replacing older, energy-hungry machinery and equipment, which strengthens the cash-flow case for an upgrade.

Housebuilding and development viability

Luke warned that planning ambition means little if schemes are not commercially viable. The OBR supported this concern in its statement and now expects 190,000 fewer net additions to the housing stock over the five years to March 2031 than it did in March, citing higher interest rates and development costs.

The Budget tries to offset some of those costs:

• A zero VAT rate on land sold to registered social housing providers from 1 April 2027. This removes the need for “golden brick” arrangements, which the Treasury says have caused delays, higher financing costs and contractual complexity.
• Preferential council borrowing rates for housebuilding extended for another year.
• An exemption from Biodiversity Net Gain for residential brownfield sites of up to 1.5 hectares, with the timetable still to be set.

These measures cut cost and friction from the development process at the margins. Landlords, however, face a further two percentage point rise in income tax on property income from April 2027.

Regional regeneration

As part of its Northern Growth Strategy, the government will launch No10 North, a programme that brings together departments, councils, businesses and universities to unblock strategically important developments.

The consultation behind it referenced brownfield land constraints, planning capacity, land assembly and utilities among the main obstacles to regeneration, illustrating a disconnect between ambition and delivery.

Mayors will be able to draw on a new growth fund and £1.5 billion of loans to alleviate these blockers. Ministers plan to work with them on higher-density housing and commercial development around stations on the proposed £45 billion Northern Powerhouse Rail network.

Alongside this sits a list of named projects, most subject to business-case approval:

• £20 million to restore Liverpool’s derelict Littlewoods building as a 260,000 sq ft creative campus for film, television, gaming and digital businesses.
• £10 million to help unlock private investment at Bristol Temple Quarter.
• More than £300 million for Leeds railway station and £15 million to expand Leeds College of Building.

Reasons for cautious optimism

The number of businesses in critical distress, the most severe category, fell 20.7 per cent year on year to 44,033. The OBR has upgraded this year’s growth forecast to 1.2 per cent and expects growth to recover to 1.6 per cent in 2028 and 1.8 per cent in 2029. Healey pointed out that Britain had beaten the forecasts this year and said he believed it could do so again. Above all, the Budget offers a period of relative predictability, which Luke argued businesses need most before they invest, expand or recruit.

The next things to watch are how quickly the regional allocations clear their business cases, how mayors use their new powers and retained rates, and whether wholesale rates reform finally makes it onto the agenda.