Small businesses provide lots of value to local communities but they are being driven out of London by exorbitant rents and alternatives are needed
Picture this: You’ve lived in the same house for decades, renting from a landlord with broad social concerns. You develop strong connections with the local community and are valued for your contributions. Then your landlord decides to triple your rent. You are faced with having to find financing for a new, higher rent or having to leave the area.
That’s the situation facing Len Maloney, owner of JC Motors, a small car repair business based in TfL’s railway arches in east London. Experiences like Len’s have become increasingly common over the past decade as a number of systemic issues have led to a loss of affordable industrial space across London, and small businesses have been organizing to resist these trends since 2012.Since 2017, NEF has been working with East End Trade Association and Len to provide job rent: Fair rent levels and lease structures will allow SMEs to thrive and provide significant social value to their communities.
London industrial construction area from 2000/01 to 2020/21 down 24% By conversion to other land uses. Inner London suffered losses of more than 40%, while Hackney, where JC Motors is headquartered, suffered losses of more than 40%. 62%. This, combined with growing demand, has pushed rents higher.By 2021, London industrial land rents will be 36% higher higher than the average of the past ten years.
Against a backdrop of scarce resources, private landlords have begun charging higher rents to small businesses across London, often with disastrous consequences.One example is Arch Company, a joint venture between large US investment firm Blackstone and British real estate investment company Telereal Trillium, which seeks Rents rise sharply from many long term tenant This approach has been characteristic of many of London’s largest landlords since the acquisition of Network Rail’s portfolio in 2018, and illustrates the damaging consequences of concentrated private ownership and profit-oriented practices.
“The inability of policymakers to adequately respond to this problem speaks to our overly centralized political system and the constraints that central government uses to constrain local authorities. “
The inability of policymakers to adequately respond to this problem speaks to our overly centralized political system and the stranglehold that central government uses to constrain local authorities.As part of the London 2021 plan, the GLA tried to slow this trend by requiring no net loss of industrial land, but Overruled by Secretary of State.On the contrary, it is forced to incorporate significantly weaker policies This opens the door to further conversion of industrial land into housing.London local authorities have also Faced with pressure to release industrial land This comes against a backdrop of central government housing targets and deep budget cuts. While many London councils have developed promising methods of renting out the commercial units they still own at below-market rents to support SMEs, For example, social value leasing, these direct interventions remain small-scale and focused on non-industrial uses. They are also constrained by a wider lack of funding in local authorities, which could be reversed in the longer term if there are changes in the political leadership of these councils.
This is also the background for Len’s landlord, Transport for London (TfL), which owns 800 railway arches and is one of London’s largest landowners.TfL has previously shown good practice in the sector, including extending the rent holiday by three months in March 2020 to support tenants and encouraging other landlords such as The Arch Company to do the same, as well as refurbishment of parts of the Arch portfolio in a more inclusive way.But they have also faced strong pressure The central government has cut net spending starting in 2020.When fare revenue collapsed during lockdown, the government negotiated a settlement August 2022 Passenger revenue is guaranteed until March 2024, but it also leaves a funding gap. In 2022, Transport for London moved to carve out its real estate arm into a separate entity, now known as london place, generating revenue to reinvest in improving transportation networks. With uncertainty remaining about the impact of the end of government support on TfL’s budget, there are concerns it will have a further knock-on effect on rents, as London venues are seen as a valuable source of revenue underpinning the transport network.
In the face of worsening rent extraction from small businesses by global capital through private landlords, and the inability of public bodies such as the GLA, TfL and district councils to adequately respond through policy, community land trusts (where land and property are owned by non-governmental bodies) situations where – for-profit organizations and democratic operations provide potential solutions for community benefit. Placing industrial properties into these trusts protects them from rapid rent increases and provides small businesses such as JC Motors with the stability they need to continue to play an important role in London’s economy.
For Len, who after 22 years of running a successful business with roots in the community was faced with the pressure of being a pawn in volatile political conditions, the only solution was autonomy. His recent letter to Sadiq Khan received more than 2,000 signatures over the summer as part of the #standwithlen campaign. Len was once again given a reprieve thanks to the support of Member of Parliament Sem Moema and a meeting with Deputy Mayor for Transport Seb Dance. But this is not a sustainable way to do business. Ryan would rather invest his energy in supporting more young people to become apprentices. Now, owning his arch through a community land trust is the only option to break the cycle of rising rents and threats of eviction, and eliminate the stress it puts on him and his employees. Placing his units in this permanently affordable structure would be recognition of the years-long campaign for social value tenancies and signal a strong commitment from Mayor Sadiq Khan.
Please support crowdfunding to help Len and other small business owners: https://www.crowdfundder.co.uk/p//tkekdarch
Picture: iStock
