Railway arch traders across London being forced out as new landlord demands rent increases of ‘more than 100%’
PUBLISHED: 14:00 14 February 2020 | UPDATED: 13:08 17 February 2020
Independent traders say they are being forced out of London’s railway arches due to huge rent hikes from their new landlord.
The Arch Company, a joint venture between US private equity group Blackstone and property investor Telereal Trillium, bought 4,455 arches from Network Rail in a £1.46billion deal 18 months ago.
It promised a "tenant first" approach, publishing a charter pledging to "understand affordability concerns". But businesses say rent reviews have started again in recent months and are as ruthless as they were under Network Rail.
The Guardians of the Arches (GOTA) trade group, which formed in London Fields three years ago to fight rent demands from Network Rail and grew into a national campaign, has now hit out over the demands and called on the next London mayor to protect traders.
The Gazette has learnt of businesses in Hackney, Newham, Tower Hamlets and Lewisham being told to pay rent increases of, in some cases, more than 100%. The Arch Company says such demands are merely a starting point for negotiations, and insists it is listening to tenants' concerns on a case-by-case basis.
That said, the number of empty arches in the capital has now risen from 900 to 1,300 in 12 months, according to GOTA.
Trevor Celisse has closed Hackney Furniture in Andrews Road, off Mare Street. He was paying £25,500 a year and after his rent rose to £43,000 - a 70% rise - he quit.
"I got it down a little bit but I couldn't afford it," he said. "They just want to make as much money as they can get. What can you do?"
Mother Kelly's in Paradise Row, Bethnal Green, has just been hit with a rent increase of more than 50%. Traders in one strip in Forest Gate have also been told their rent is going up by "at least double", according to Natasha Dorrington who runs The Old Slate Yard.
"We are paying £14,000 and they wanted £36,000," she said. "Our family has had this shop since 1982. It's outrageous. A lot of the arches are empty. We gave one back 14 months ago because it was too much and it's still empty. They're going to put us all out of business."
Over in Homerton half of the 10 arches in Ponsford Street are empty and two more tenants are leaving.
Penelope Kupfer owns art studio Kupfer, paying £24,000 a year. The Arch Company initially told her if she wanted a new lease she'd have to pay £30,000. It was negotiated down to just over £25,000, but Penelope says she's already overpaying.
"It's David vs Goliath," she said. "We only agreed our rent of £18,000 going up to £24,000 three years ago because Network Rail promised to make the area desirable. We spent £15,000 on windows, floors, double doors, we built a mezzanine.
"What have they done for us? Zero. The rent is not actually going up that much, but we are already overpaying."
Penelope is not surprised at what is happening.
"We were really worried when the arches were sold and we thought it was going to get worse," she said. "At first it seemed like maybe it wasn't going to be worse, they were writing: 'Dear tenant we want to be great landlords'. And then they come and it's: 'Bang!', in your face.
"We have to go, I can't afford to pay any more. Money is tight."
Next door, Dark Arts Coffee is also set to leave after a small rent rise. Luckily it has another nearby unit it can use, but not everyone is in that position.
"I think it's criminal," said owner Brad Morrison. "Six years ago when the arches were first converted from garages all the arches were paying £7,500 a year."
Brad also said the "comparables" - existing rents paid in the area that are used to justify demands - are not comparable at all. One unit was not even a railway arch and the other rent cited was not an agreed rent, but one being negotiated. That tenant decided it was too expensive and has now also moved out.
Traders in Deptford are also being hit with huge rent increases of 100% plus. In a letter to the landlord demanding answers, Lewisham mayor Damien Egan and Lewisham Deptford MP Vicky Foxcroft said: "We are gravely concerned that sudden and excessive rent rises would lead to businesses being forced out of the area."
GOTA managing director Leni Jones said the group was calling on Sadiq Khan and other mayoral candidates to place affordable workspace at the top of their manifestos.
She added: "The Arch Company made a public commitment to support tenants, however we continue to see threatened rent increases in excess of 100% and sadly more business closures across the capital.
"The Arch Company is a monopoly landlord which is actively preventing fair and transparent rent negotiations by withholding rental information.
"GOTA will not wait any longer, we are taking action now and calling on all tenants to join us and the mayor of London to listen before it's too late."
The rent reviews will continue to take place every three or six years as they did under Network Rail. Under the terms of the deal, leases offering security of tenure have been banned.
Hackney South and Shoreditch MP Meg Hillier, who in her role as chair of the Public Accounts Committee said tenants were not considered until "far too late" in the sale, says she will be speaking to the Arch Company about the rent reviews.
Hackney mayor Phil Glanville added: "We've stood up for the hundreds of independent businesses operating from arches in Hackney since Network Rail's sale was announced, and have continued to pressure the Arch Co to deliver on its commitment to protect tenants from unreasonable rent hikes.
"I'm hugely concerned by any reports of businesses now being priced out and will be speaking to the company to find out why this is. I'd encourage any business that is struggling to contact us so that we can offer support."
The Arch Company said: "We understand the affordability concerns some long-standing small businesses may have and committed in our Tenants' Charter to consider individual circumstances on a case-by-case basis. Negotiations are still on-going, but we are working closely with our tenants to address any affordability issues and agree suitable rents."
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