Fears that thousands of shops housed in railway arches would face crippling rent rises are being borne out after the sale of Network Rail’s property portfolio, owners of the businesses have said.

Despite concerns from tenants, last year the government signed off the £1.5bn selloff to Telereal Trillium and Blackstone Property Partners, who took control of the 5,200 properties.

With the arches used by businesses across the country, from bakers and bike shops to mechanics and brewers, there are claims that as a result some of them have been hit with up to 85% rent increases.

Small firms face 'extermination' due to Network Rail asset sale Read more

One tattoo artist said that after a visit from the Arch Company, the vehicle through which Telereal and Blackstone own the sites, his landlord received a phone call saying they wanted him out within four weeks as his shop did not “fit their business model”.

Moby Kenyon, a tattoo artist from Peckham, started his business with four others two years ago and employs 12 people at the store, Rye Lanez.

“It would be beyond devastating, it would destroy the business,” he said, reacting to the possibility of being evicted in less than a month. “We have put so much work into getting this place set up. We’ve never taken any loans out but grown it organically.

“We are just good people and want to do the best by our staff and our customers. We have a big following and its growing quickly. We have a lot of repeat clients who specifically come to us.

“There’s also special days we run where we do food outside and people get tattoos and hang out together. There’s a big community feel and we have had that since we started.”

Kenyon said the business had originally started in a smaller unit but moved into the arch as it continued to grow. “After they called my landlord he pleaded with them saying it would destroy our business and asked for at least eight weeks. They replied saying they would give us six, but still to this point I haven’t received anything formal like a letter of eviction,” he said.

“I think they are just making threats and hoping I will leave through being bullied rather than disputing what they are trying to do.”

In May the National Audit Office concluded that the sale had been carried out without consideration of the impact on the lives and livelihoods of the tenants and that rents could go up by 50% in the next three to four years. They concluded that the tenants’ fears had been well founded, but had only been considered late in the sale process.

George Grant, who owns Clapham North MOT in London, took on the business from his father Ronnie, who set it up in an arch 60 years ago.

“We had to fight tooth and nail and they gave no quarter,” he said. “I had to take on the power of the government, Network Rail, Blackstone, etc and had to spend a lot of money on legal fees and after all that our rent has doubled.

“We don’t have an opportunity to double our prices – and why would we? Our MOTs have not gone up since 2010. I’m not pleading poverty because we’re still in business but it’s really difficult to run a business, period. It’s even more difficult to run a business with this sword of Damocles hanging over your head.”

Play Video 5:21 Death under the arches: the businesses at risk due to rail sell-off - video

A campaign group that represents tenants, called Guardians of the Arches, has launched a crowdfunding campaign to continue to support their tenants’ association.

Leni Jones, director of Guardians of the Arches, said: “Our new landlord made a big promise: to put tenants first. We said we would hold them to account on that, and to be frank the jury is still out. But stories like these are bound to confirm some of our members’ worst fears.

“We’re building a powerful and democratic organisation to work for us and the communities we serve. Individually, we’re vulnerable. But together, we are strong.”

A spokesperson from The Arch Company said: “The tenant who leased this arch from us improperly sublet it to a third party, reported here as a tattoo parlour, which is not permitted under the terms of our leasehold with Network Rail. As soon as we asked about this, which we are legally obliged to do, our tenant surrendered their lease. We have not sought to remove any specific business and are bringing hundreds of vacant arches back into use.



“Now our tenant has surrendered their lease, we would be delighted to discuss options to lease this arch or an alternative one to the tattoo parlour who had sublet this arch and will be in touch to discuss. While we will never seek more than fair market rents, we also appreciate some long-standing small businesses have specific affordability issues and are happy to consider each business’s individual circumstances on a case-by-case basis.”