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Network Rail 'placing small businesses at risk'

By Alix Culbertson, news reporter
Thousands of small businesses are at risk of closing down as Network Rail sells its railway arches off.
From artisan bakeries to family-run garages, from Manchester to Bristol, business owners fear they will be left without their livelihoods as the publicly-owned company is set to sell about 4,000 arches by the end of this year.A buyer will purchase all of the arches as one, with tenants allowed to remain.However many of those independent businesses across the country have already been forced to close as their rents over the past year have sky-rocketed.Tenants believe the unprecedented rent increases of up to 500% - some backdated seven years with little notice - over the past year are linked to the sale.
Network Rail 'placing small businesses at risk'

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Network Rail arches sale leaves woman in tears
Network Rail insists the increases are only fair and are benchmarked against similar commercial premises in the same areas.Three private investment firms, Goldman Sachs, Blackstone and Terra Firma, are expected to put a bid in for all of England and Wales' commercial railway arches.The sale was ordered by then chancellor George Osborne in 2015 to raise money for the debt-ridden national asset.But most of the arches tenants have only recently been made aware of the sale.Ben Mackinnon, owner of E5 Bakehouse in London Fields, east London, helped set up campaign group Guardians of the Arches (GOTA).He said he understands Network Rail is running a business, but it is also responsible for thousands of people's livelihoods.
Network Rail 'placing small businesses at risk'

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Ben Mackinnon, founder of E5 Bakehouse, says Network Rail is selling for short-term gain
He told Sky News: "There are very few commercial spaces in these inner city areas."The arches are a public asset, there could be a more sensitive way of handling those rent increases, especially when you consider that Network Rail is the biggest landlord of small businesses in the UK."To me, it would make more sense if they held onto the arches and slowly increased rents to bring in long-term income but I imagine they're in a position where they need cash really quickly because they're at a loss."They've been pushing rents up around the country to show they have a more valuable asset."Down the road is Chu's Garage, started three decades ago by Chuong Chu who escaped the war in Vietnam, taught himself English and mechanics and then started the Hackney garage.
Network Rail 'placing small businesses at risk'

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Network Rail is selling all its railway arches in England and Wales
His four children now proudly run the garage but fear his legacy could be lost as they have received demands their rent increases by 300%, with six months back pay.Nhi Vinh Chu told Sky News: "We got a letter two years ago asking for the increase, it was overwhelming and we couldn't believe it after 28 years of guarding this arch - we were never late with rent once."We had to fight to keep our beloved family business so we've been negotiating for two years."We have heard so many similar stories from other businesses, including some who have had 500% rent increases, with six years of back rent. We've lost a fifth of businesses in our set of arches."Industrial businesses like ours are the support structure of this country so this will have a greater effect on the economy."Will Brett, from the New Economics Foundation think tank, has been helping GOTA, and says its chartered surveyors found the arches they looked at were not worth the excessive rent increases.He questioned the government's priorities, asking if they are on the side of small businesses or private investors who want to generate massive profits, no matter what the consequences are.
Network Rail 'placing small businesses at risk'

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Marcus Jones has run Rosso Corse from an east London railway arch since 2005
Eleni and Marcus Jones have run Rosso Corse, a specialist Ducati motorcycle garage in Bethnal Green, London, for 13 years after he put compensation money from a serious motorbike crash into becoming a mechanic so he could eventually own his own garage.Mrs Jones told how being in a railway arch is essential for their business because not many landlords would withstand a motorcycle garage, so they put up with flooding and large rats in exchange for lower rents."We are currently paying €4.10 per square foot and Network Rail wanted to increase it to €15 per square foot immediately," she said."We feel trapped because they made it absolutely clear they will evict us if we didn't agree on the rent - it felt like our world was caving in."We've also got contacts in Newcastle with exactly the same story and we have many tenants in Manchester and Bristol equally struggling. So it's very clear it's a national story here."A spokesman for Network Rail told Sky News: "The sale of Network Rail's arches will enable the company to raise funds to improve the railway network for the benefits of millions of daily users.
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"We benchmark against similar commercial premises in the local area and aim our rents at the lower end to make them competitive."Some areas have seen marked regeneration in recent years which can lead to increased rents but we will always do our best to stagger any increase."
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