Hackney railway arches: Long-standing London Fields traders quit after losing battle over huge rent hikes
PUBLISHED: 07:00 29 March 2018 | UPDATED: 11:27 29 March 2018
Dejected traders in Hackney's arches are packing up and leaving after admitting defeat in their battle over crippling rent hikes from Network Rail.
The exodus threatens to rip the heart out of the borough’s industry as the upholstery firms and garages make way for cafes and workspaces.
The transport body has been sending out notices of 200 per cent rent increases to businesses in London Fields, Mare Street and Hackney Downs.
Last year the Gazette revealed a group of traders in London Fields had come together to fight the demands, and negotiations rumbled on for months.
MP Meg Hillier even had a “positive” meeting with rail chiefs in Parliament. But despite that, 10 traders were this month given two weeks to agree to a new deal. The offer was a small increase in the first and second years rising to, give or take, a 100pc increase in the third. It was an improvement on the initial demands, but nowhere near the level they can afford.
The deadline has now passed. One trader has already left, five are looking to, and two are going to arbitration – where the rent will be set by independent assessors. Regardless of their decision, they must all pay the new terms dating back to when they received their notice – for some, that’s more than £15,000.
Network Rail argues the rent is the going rate for the area and that it is obliged by government to get “value” for the taxpayer. But market rent is being driven up by the offices, cafes and restaurants that have moved in nearby over the last few years.
That includes places like E5 Bakehouse and Patty and Bun, which are “light industrial” in planning terms but take advantage of “permitted use” rules to devote 25pc of their space to selling coffees and burgers. That allows them to afford much higher rents, and no one has a problem with that. But how can MOT centre Chu’s Garage be expected to double its payments? It can’t start selling snacks out the front. It can’t even increase the cost of an MOT, which is set by the government.
Derec Hickman, of Chu’s Garage, said: “It’s going wrong with the rent review process, which is controlled by the Royal Institution of Chartered Surveyors (Rics). The process is flawed. It allows Chu’s Garage to be compared to the cafes around it. We know the rent will go up because the area is desirable, but there has to be a line.”
Last year Derec formed traders’ group The Guardians of the Arches, which has since gone national as Network Rail takes its demands elsewhere.
This month he met chiefs at Hackney Council and Tower Hamlets – where Bethnal Green traders are in a similar position – and is encouraged by Cllr Guy Nicholson and MP Meg Hillier vowing to take the matter further.
A study commissioned by Hackney Council last year found the average rent for industrial businesses in “middle Hackney” from 2014 to 2016 was £5.88 per sq ft, a 1pc increase on 2009 to 2011. Chu’s Garage is already paying £10 per sq ft, almost double that.
This isn’t technological progress rendering these businesses obsolete, it’s not even a case of cheaper options driving customers away. Chu’s Garage is the only place in the borough doing Class 7 MOTs for heavy vehicles. It does all the council’s MOTs. It’s as busy as ever, but after 30 years it can no longer afford to exist in Hackney.
It was opened by Chuong Kim Chu in 1988, when you were more likely to get mugged in London Fields than get a coffee. The family has spent £100,000 on the garage, including £22,000 on a pit so they could do the Class 7s.
“If we just moved in or have been here for 30 years, they don’t care,” Chuong Kim’s son Quang said. “The area is very trendy, there are lots of people moving in. They want to get rid of us.”
Nhi Chu, Quang’s sister, added: “They rejected all our offers. We pay £10 per sq ft, they wanted £20. We increased it to £15, the most we could afford, and they said no. We did it as a group, all 10 of us. We went around and said: ‘What is the absolute maximum you can afford?’ We were pushing and pushing – ‘another 5pc, another 5pc’. We submitted the absolute maximum for everyone. They wrote back in a week saying no.
“Quang keeps saying: ‘Surely after 30 years of never missing a payment they can’t do this. They can’t just throw people out.”
A Network Rail spokeswoman said: “We have made every effort to resolve these cases and extended the time period significantly beyond normal practice. We wrote to each tenant with our best and final offers. This, on the whole, has been received positively, and allowed us to progress the majority of the reviews.”
Charlie Fox, Poetsyle
Upholsterer Charlie has already moved his warehouse out of nearby Bayford Street industrial site after more than 25 years over after huge rent demands from the private landlord. He’s now in Hainault, Redbridge.
Now he looks set to leave his workshop in the arches too.
“They offered me the same as everyone else,” he said. “But because it’s taken 18 months to get down to a rent that’s more agreeable it’s now back dated. In December 2016 they wanted £31 per square foot. Now they are saying £18 from November 16 to September this year. After that it goes up to £24.
“It’s been stressful to say the least. We’ve been trying to carry on manufacturing while relocating. We’ve lost a lot of the local business, we’ve had for the last 30 years.
“Hainault is eight miles away and we are stuck on an industrial estate, who’s going to travel here?
“They’ve hung us out to dry.
“It’s been hanging over my head for 18 months. I can’t go to my customers and double my price.”
Ali Sharif, Sharif Auto Services
Ali has two garages around the back of the arches in Warburton Street. He is the only other trader going to arbitration with Chu’s Garage after failing to settle on the offer from Network Rail.
He pays £30,000 a year and initially the demand was for that to rise to £100,000. When he offered to give up one arch, he was told it would cost £40,000 to have them split and one would cost £60,000.
“They wanted a 200pc increase.After negotiation they came down to 80pc but I told them I could only afford 50pc.
“It means we are out of business. There’s no other place for us. It’s an MOT station, we can’t just open up anywhere we like.
“When we opened here it took us five months for the council to get permission and we paid rent for those five months. We’ve been here for eight years.
“Their plan is just to push us out. They want new tenants so they can charge more. They are ruthless. I have a family, I am here to make a living.”
Sulaman Ozer, Catering Equipment workshop
The Catering Equipment workshop has been manufacturing machinery in the Mentmore Terrace arches for 17 years.
But now, the family that runs the business has no choice but to leave.
Sulaman Ozer had repeatedly told Network Rail he was unable to pay a penny more than the £15 per sq ft he is already stumping up.
The current rent is more than three times the average for an industrial business of his type in the middle of Hackney but way short of what Network Rail want.
The final offer was £17 per sq ft until January 2020 and £22.50 per sq ft thereafter.
Like the other traders, the family had two weeks to decide whether to accept or leave, and they have now handed in their notice.
“They are increasing the rents so much he wants to move,” said Sulaman’s daughter Ezra.
“His notice is three months so he is now having to look for somewhere to go. We mainly serve people in Hackney. Most of his customers are here, but he has no choice but to leave.
“He’s not feeling good about it, but he has to.”
Viet Zu, USA Nails
“We used to own three arches and we’re now down to one. We had already gone down to two and were paying about £22,000, and they wanted £49,000.
“We managed to get it down to £32,000 which is better but still not enough to stay afloat so we are closing another one down.
“It’s ridiculous how much they want. We are only a warehouse unit. We don’t get customers coming in. We now have to downsize the business altogether. We are wholesale, so the more we order the cheaper it is.
“These days the units cost about £3,000 a month, it used to be just over £1,000.
“It’s just brought unnecessary stress and put the business under pressure. I’ve only been running it since December 2016 but my dad had been here for 20 years.”
If you are a trader affected by Network Rail rent hikes you can contact The Guardians of the Arches on 020 3561 9952 or email@example.com.
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