Don’t think leases work like that, do they?

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.

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.

There usually are break clauses in leases. But one that takes effect in 4 weeks over “we don’t like you”?

I have more than a sneaking suspicion that there’s no lease here. So, in the absence of a lease and security of tenancy why is there this complaint about insecurity of tenancy?

21 thoughts on “Don’t think leases work like that, do they?”

  1. Might be a contractual licence, but even they can come with more security of tenure than might be supposed.

    And oh. Fewer tatts.

  2. Bloke in Germany

    Oh, you think the landlord won’t try it on with “get lost, we don’t like you” irrespective of what the contract says???!!!

  3. ” his landlord received a phone call saying they wanted him out ” so sub-let, maybe not within the terms of the ‘landlord’s (actually a leaseholder) lease.

  4. The Meissen Bison

    It would be beyond devastating, it would destroy the business

    I can’t help thinking that that sentence is crying out for a “literally”.

  5. Could be lease has ended, could be lease is open – or could be redevelopment of site.
    There are ways round leases for landlords, some of them expensive.

  6. djc looks to be right, this ‘tenant’ is nothing of the sort, he’s a sublet, possibly against the terms of the lease that is in place with the actual tenant.

    I’m conflicted here – I can see there are two scenarios, in fact both of which can be true at the same time; firstly undoubtedly there will be a myriad of lease violations that have been let slide by the Network Rail bureaucracy, they just wanted an easy life, if the rents kept coming in, who cares if there’s illegal subletting going on. Don’t rock the boat, everyone is happy. So the new owners could be entirely reasonably going through the paperwork to see exactly who is in occupation vs who should be. And chucking out those in blatant violations of their leases.
    Secondly I can also envisage that a bunch of sharp suited private capital arseholes would want to get rid of tenants on what they consider uneconomic rents and would not be above lying and using sharp practice to achieve their aims, without a care or thought for the livelihoods of those they chuck out. Because dicks are attracted to private capital operations like flies to shit.

  7. Secondly I can also envisage that a bunch of sharp suited private capital arseholes would want to get rid of tenants on what they consider uneconomic rents and would not be above lying and using sharp practice to achieve their aims, without a care or thought for the livelihoods of those they chuck out.

    And who will replace independent businesses with a chain outlet or a glass-and-steel monstrosity.

  8. Ted S, Catskill Mtns, NY, USA

    So, in the absence of a lease and security of tenancy why is there this complaint about insecurity of tenancy?

    Because it lets the press set up another “evil guy with lots of money victimizing pugnacious little guy” narrative.

  9. “And who will replace independent businesses with a chain outlet or a glass-and-steel monstrosity.”

    Exactly. Its precisely this kind of behaviour thats giving capitalism a bad name, and allowing the likes of Corbyn to get traction.

    The older I get, and the more money I manage to make, the more I realise that those with wealth have a duty to manage it not just with their own pocket in mind but the the wider part of society as well. Noblesse oblige, as my mother always says, with privilege come responsibility. And its very rarely observed these days, ironically just as Toby Young’s father predicted back in the 50s – the rise of the ‘meritocracy’ was in fact a bad thing, as those who get to the top think they’ve done so entirely on their own efforts and as such look at the ‘losers’ in life below them with disdain, rather than an attitude of ‘there but for the grace of God go I’.

  10. 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”.

    Sounds like there is a sub-lease here, the head-lease being between ‘his landlord’ and Arch Company.

    Could it be maybe the head-lease does not permit sub-letting or a sub-lease has a simple four week period of notice rather than set break points?

  11. Tim Newman, the reason for replacing with a chain outlet or glass and steel place is because there is demand for such a thing.

    Otherwise no way could it last as a business.

    Do not presume to decide what the public should have access to.

  12. Bloke in North Dorset

    If he had a 4 week notice to quit in the tenancy agreement presumably he also only had 4 weeks liability in the event his business failed?

    We always being told how difficult it is on the high street so presumably there’s some cheap property somewhere? Four weeks to set up a new business is tough but should be doable, let’s face it Tattoo parlours aren’t renowned for being salubrious.

  13. On the subject of freeholds, leases, head leases, and sub-leases: what did the Arch Company buy from Network Rail? The freehold subject to a wayleave for the railway or a long lease on the arches? Do they expect to make money from renting out premises with a lot of noise and vibration in what are usually not the nicest of areas, or do they hope for a redevelopment jackot when the railway is closed.

  14. In an age when bricks and mortar retail is falling in demand the landlord wants to turf out a debt paying tenant!
    Either this guy is paying a seriously low rent, or the landlord is going to wind up with no tenant and no rent.

  15. corrected
    In an age when bricks and mortar retail is falling in demand the landlord wants to turf out a rent paying tenant!
    Either this guy is paying a seriously low rent, or the landlord is going to wind up with no tenant and no rent.

  16. “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. ”

    On that basis, National Rail were undercharging, which sounds likely as they’re an incompetent bunch of tossers.

    And can’t people like garages and tattoo parlours get a bit more creative about how to use locations? Move out to Streatham and collect the cars from the customers, or do a visiting tattoo service where you come to someone’s home? London is an expensive place to run a business.

  17. Sub-let is most likely legal reason reason.

    The “business model” excuse – maybe tenants in the other arches don’t like the chavs, uglies & druggies who frequent the tat shop

  18. Possibly 4 weeks is a problem if there’s licensing issues and premises need inspection etc, not sure of the current U.K. rules

  19. Impossible to conclude anything without seeing all the agreements. On a normal lease the T may have a right to hold over.

    Buggering around with company structure should not affect things.

    According to a para that would not normally pass the Guardian thickos-only rule, it seems to be an unlawful lease – in which case 4 weeks may be kind. The tenant is probably making more from the difference than the LL is.

    “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.””

  20. @Bill

    First thing jumped out at me was that the landlord saying it was a business model fit issue isn’t something we heard from the landlord at all… It was communicated second-hand from the guy who sublet and then third-hand from the tattooist. Both of whom (though I’m thinking more likely the middleman) would rather lay blame on a faceless capitalist corporation than stick their hands up and admit doing a naughty thing with a sublet.

  21. “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.”

    ah, so there appears to be a headlease from Network Rail to the Arch Company, a lease for an arch, and an irregular sub-let to the tat.

    As usual with journalism the headline is at odds with the facts.

Leave a Reply

Your email address will not be published. Required fields are marked *