The Valuation Office Agency (VOA) is fundamentally reviewing how business rates are applied to managed, flexible, and shared workspaces. This shift, driven by recent case law and government clarification, means that many serviced office buildings are now being assessed as a single property (‘hereditament’) rather than the historical approach of separate assessments for each occupier. This change has significant, potentially backdated financial implications to April 1, 2023, affecting both workspace operators and the SMEs, micro-tenants, and not-for-profit organisations who may lose eligibility for crucial reliefs like Small Business Rates Relief (SBRR)This document provides a critical overview of these changes, who is affected, the difference between whole-site versus separate assessments based on tenant agreements (licence vs. lease), and the recommended actions you should take immediately to assess your financial exposure and prepare for potential backdated liabilities.
VOA Business Rates:
Managed & Shared Workspaces – Overview & Implications
1. What’s changing?
The Valuation Office Agency (VOA) is reviewing how business rates apply to managed, flexible, and shared workspaces. Following case law and government clarification, the VOA now tends to treat serviced office buildings as a single property (‘hereditament’) rather than multiple small ones. These changes can be backdated to 1 April 2023, potentially affecting many operators and occupiers who previously benefitted from separate assessments and Small Business Rates Relief (SBRR).
2. Who’s affected (including not-for-profits)?
- Workspace operators and landlords – May face consolidated, backdated rates bills and loss of reliefs.
• SMEs and micro-tenants – May lose SBRR if their individual assessments are merged.
• Not-for-profit organisations – May see reduced eligibility for charitable relief if managed workspace activity is deemed commercial, particularly where the main purpose is income generation for business support.
3. Whole-site vs. separate assessments
Historically, each occupier with exclusive possession could have a separate rating assessment. Under the new VOA interpretation, most serviced offices will be assessed as a single hereditament unless there is clear evidence of separate occupation. This shift can remove SBRR eligibility and alter liability patterns across a site.
4. Licence vs. lease implications
The key factor is exclusive possession:
• Lease – Usually grants exclusive possession, supporting a separate rating assessment.
• Licence – Typically allows the operator to retain control and relocate occupants, leading to a single assessment for the building.
The wording of agreements and how space is actually used day-to-day are critical in determining VOA treatment.
5. Practical impacts
- Loss of Small Business Rates Relief (SBRR) for tenants.
• Potentially large backdated bills to 1 April 2023 for site operators.
• Charitable rate relief may be limited if income-generating activity dominates.
• Greater administrative burden for evidence gathering and appeals.
• Possible severe financial strain for not-for-profits or workspace operators reliant on rental income to fund support services.
6. Recommended actions
- Review documentation – Identify which tenants hold leases versus licences.
2. Gather evidence – Floor plans, access control, and photos of physical separation.
3. Use the Check–Challenge–Appeal process promptly for disputed valuations.
4. Engage with tenants – Model financial impacts under both whole-site and split scenarios.
5. For not-for-profits – Ring-fence areas wholly used for charitable purposes and seek discretionary reliefs where possible.
6. Assess financial exposure – Calculate the potential liability if backdated charges are applied and consider the impact on reserves and ongoing sustainability.
7. Call to Action
If you have experienced a VOA change, have received notice of backdated adjustments, or are currently being asked to provide information about your site, please get in contact. Likewise, if you are in the process of preparing for or engaging with a tribunal on these issues, it’s vital to share your experiences and insights.
If this situation poses a serious threat to your organisation’s financial position, reserves, or long-term sustainability, please reach out urgently. The implications of whole-site assessments could, for some operators and community-based organisations, be significant enough to jeopardise ongoing delivery and force closure. Sharing case examples and impacts will be essential for coordinated representation and potential sector-wide advocacy.
8. Key terms
- Hereditament – A unit of property liable for business rates.
• Rateable occupation – Requires actual, exclusive, beneficial, and non-transient occupation.
• SBRR – Small Business Rates Relief, available only to small, separate assessments.
This summary is intended to help organisations and managed workspace providers consider their position and prepare for potential changes arising from the VOA’s revised interpretation and any backdated adjustments to 2023.
9. Statement from Newmark Group who are a leading advisor and service provider.
Current position regarding Business Rates and the Flex Sector
Flex/Serviced offices/workshops/studios have been assessed as multiple units for circa 20 years, originally at the request of the Valuation Office Agency.
In late 2022 this approach came under review, thanks in a large part due to pressure from a number of local authorities, led by City of London. They had concerns around the amount of administration involved in managing, in some cases hundreds of assessments per building and potentially the misuse of reliefs such as Small Business Rates Relief (SBRR). This culminated after many months of threats of backdated mergers (some were done) in an agreement on the way forward.
The agreement was never documented as such but centred on the wording of licences and this the rights of tenants. The VOA would only assess buildings as multiple assessments if licences were seen to give “paramount control” of individual offices/studios to the tenant. This meant large part of the industry updating their licences.
We hoped this had put the matter to rest but early this year it became clear that the issue had not gone away, nor the frustration of local authorities.
Today we are potentially back where we were 3 years ago. VOA are reviewing licences again, even those previously “approved” and some operators are looking at short leases as a way around the issue. The process of getting a new site split is grinding to a halt in some areas as the VOA is keen to take the issue through the Tribunal/Court system but that will take several years to get to a conclusion that all will accept. In the meantime, the uncertainty continues and cases proceed on a case-by-case basis.