Budget 2026: what business rates retention zones and Good Growth Funds mean for Greater Manchester businesses buying premises

Greater Manchester is named first in the Budget's list of places that will get a new Business Rates Retention Zone. Alongside that, the Budget sets out a bigger share of business rates for mayors, seed money for local Good Growth Funds and a £1.5 billion borrowing facility for mayoral authorities. None of this changes the rates bill on your unit tomorrow. It does change who keeps the money and what local leaders can afford to build, and that matters if you are deciding where in the city region to buy your premises.

What a Business Rates Retention Zone is

Today, most business rates collected in England are pooled and redistributed. A retention zone changes that for a defined area. The Budget explains that "within these zones, the relevant billing authorities can retain 100% of business rates growth above an agreed baseline for 25 years, allowing them to invest in local priorities" (Budget 2026, para 6.43).

In plain terms: if new offices, industrial units or shops get built inside a zone and the rates collected there rise above an agreed starting point, the local councils keep all of that extra income for a quarter of a century. They can borrow against it to pay for roads, public space, site clearance or transport that make more development viable. Councils have an incentive to get commercial floorspace built, and a way to pay for the groundwork.

What a zone does not do is cut your bill. Retention is about where the money goes after it is collected. Nothing in the document says ratepayers inside a zone pay less.

Who is in the first wave, and who is not

The Budget sets out "the first wave of new Mayoral Strategic Authority (MSA) Business Rates Retention Zones" in the following areas (para 4.61):

• Greater Manchester
• East Midlands
• Hull and East Yorkshire
• Liverpool City Region
• Tees Valley
• West of England
• North East
• York and North Yorkshire
• the Greater London Authority

Two caveats matter. First, this is an intention "subject to Full Business Case approval and legislation" (para 4.61), so Greater Manchester's zone is not yet in force, and the Budget does not say which sites or boundaries it will cover. Second, the document is not fully consistent: para 6.43 refers to "nine Strategic Authorities", while para 4.61 lists eight areas plus the Greater London Authority. The list above is the one the Budget actually names.

Lancashire, Cheshire and the other neighbouring areas are not on that list. Lancashire appears instead among ten new devolution agreements that are "in final stages" (paras 4.67 to 4.68). So a business weighing a unit in Greater Manchester against one just over the boundary should not assume the same local investment tools apply on both sides.

The examples the Treasury gives of what zones will support are Stratford, Derby and Selby (para 4.61). It does not name a Greater Manchester project, so be wary of anyone who tells you a particular site has already been chosen.

More of the rates pot stays with the mayor

Separately from the zones, the Fiscal Devolution Roadmap gives mayors "a 20% share of locally retained business rates from next year", with local and regional government retaining "100% of business rates income by the end of the decade" (para 4.60). The share kept by local authorities will rise "to at least 70%", starting with mayoral authorities "receiving a 20% share of business rates from April 2027" (para 4.66).

The Roadmap also includes income tax assignment for all mayors "beginning in 2028" and plans to give every Strategic Authority the power to bring in an Overnight Visitor Levy (para 4.60). Local leaders can set out their revenue plans for the levy "by March 2028" (para 6.40). If you own or are buying a hotel, aparthotel or serviced accommodation in the city centre or around Salford Quays, keep an eye on whether the Combined Authority chooses to use that power.

Good Growth Funds and the £1.5 billion borrowing facility

The second strand is money that local leaders can invest. The Budget confirms "£285 million in 2027-28, comprising £165 million to support places with a mayor in place in 2027 to establish Good Growth Funds and £120 million of incubator capital funding" for areas still moving towards devolution (para 4.64). Elsewhere it calls this "transitional seed funding for one year" (para 6.44). Greater Manchester has a mayor, so it falls into the first group, though the Budget does not give a per-area allocation.

On top of the seed funding, there is "a bespoke borrowing facility of £1.5 billion for MSAs", to be "operational by April 2028", which will "include mechanisms to enable concessional lending to support a broad range of locally determined projects" (para 4.65). Concessional lending means loans on softer terms than the market would offer.

The Budget also confirms City Investment Funds, made up of grant, loan and patient capital, for mayors in several city regions including Greater Manchester (para 6.45).

The important point for an owner-occupier: these funds are aimed at regeneration and development projects chosen by local leaders. The Budget does not describe them as a source of mortgages for individual businesses buying their premises. Their effect on you is likely to come through what gets built nearby, not through a loan offer.

What else the Budget says about Manchester

A few Greater Manchester items appear elsewhere in the document:

• Convatec's global research and development hub in Manchester, an investment of over £500 million (para 4.79)
• a new AI Cyber Security Centre of Excellence in Manchester (para 4.130)
• £10 million for Bury Indoor Market (para 4.91)

These are signals about demand for space, particularly for life sciences, technology and the businesses that supply them. A lender will still assess your deal on your own accounts, your rent roll and the valuation of the building as it stands today.

What it means if you are buying premises

Location choices. If retention zones and Good Growth Funds bring forward new infrastructure in parts of Greater Manchester, the surrounding commercial stock may become more attractive over time. That is a reason to ask your agent and solicitor about planned public investment near any unit you are considering. It is not a reason to pay above what a RICS valuer will support, because lenders lend against current value and existing comparable evidence.

Running costs. Your rates bill is still set by your rateable value and the national rules. For retail, hospitality and leisure premises in England, the Budget raises the Small Business Rates Relief thresholds to £18,000 for full relief and £21,000 for tapered relief from 1 April 2027 (para 6.190). If you trade from an office, workshop or warehouse, those higher thresholds do not apply to you. Model your costs on the current rules, not on retention.

Borrowing costs. The Budget gives no Bank Rate forecast. It notes inflation of 3.5% in September, peaking at 3.8% in the first quarter of 2027 before returning to 2% by the third quarter of 2028 (paras 1.13 and 1.37). Plan your application on today's pricing, not on hoped-for cuts.

What to do now

1. Check the boundary. Confirm which council area and Combined Authority the property sits in. Inside Greater Manchester, follow the zone's Full Business Case as it is published.
2. Ask about local investment plans. Before you exchange, look at the Combined Authority's and council's published growth plans for the area around the unit.
3. Separate the bill from the policy. Get your rateable value and current liability confirmed. Retention changes who receives the money, not what you pay.
4. Prepare the lender pack now. Two years of accounts, management figures, a clear explanation of how you use the premises and a realistic budget for purchase costs. These matter more to a credit decision than any devolution announcement.
5. Hotels and serviced accommodation: factor in the possibility of a local Overnight Visitor Levy when you forecast trading, once the Combined Authority sets out its plans.

Key dates

• 1 April 2027: mayoral authorities begin receiving a 20% share of business rates; higher SBRR thresholds for retail, hospitality and leisure properties (paras 4.66 and 6.190)
• 2027-28: £285 million Good Growth Funds seed funding (para 4.64)
• 2028: income tax assignment for mayors begins (para 4.60)
• By March 2028: local plans for Overnight Visitor Levy revenue (para 6.40)
• By April 2028: £1.5 billion MSA borrowing facility operational (para 4.65)
• By the end of the decade: 100% business rates retention by local and regional government (para 4.60)

Brought to you by Business Mortgages Broker

This article was written by Business Mortgages Broker, which arranges owner-occupier business mortgages for UK trading companies. Founder Matt Lenzie has 25 years in financial services, raising debt and equity, and has arranged around £400m of property finance. For more on buying your premises in the city, read the Business Mortgages Broker guide to business mortgages in Manchester.

Source: HM Treasury, Budget 2026 (HC 726), 28 October 2026. This article is general information, not tax or financial advice.