Campaign group hands transport minister list of demands over £1.5bn Network Rail arches sale | City A.M.

Thousands of businesses facing rent hikes from the sell-off of Network Rail’s £1.5bn commercial property portfolio have written to the transport minister Jo Johnson to demand he safeguard their interests.

Among the proposals is the request that he pause the sale to allow local parties to declare their interest; a “year-zero” rent audit to ensure rents are set fairly and transparently and an end to three-month rolling contracts.

The businesses face potentially huge rent increases when their landlord switches from Network Rail to the chosen bidder. In one example, a 93-year-old garage owner in Clapham faces a surge in annual rent from £33,000 to £147,000 a year.

Research by the New Economics Foundation, which supports The Guardians of the Arches campaign group, found that the businesses contribute more than £725m to the UK economy every year.

Read more: Ex-Sunderland AFC owner in race for £1.3bn Network Rail portfolio

The shortlisted bidders are CK Asset Holdings, Terra Firma, Kildare Partners and Blackstone/Telereal.

Goldman Sachs and Wellcome Trust joined forces to launch a £1.2bn bid for the property, but is understood to have pulled out from the deal.

David Biggs, managing director of Network Rail property, said: “We are selling a thriving estate of small and independent businesses and we believe the portfolio is a highly attractive business with growth potential.

“We are proud that we have so many independent and diverse businesses thriving on our commercial estate, and for the tenants that run these it will be business as usual once the estate is sold. All lease arrangements will transfer to the new owner and all arrangements and protections will stay in place.

‘We believe a new owner will bring more investment to the commercial estate, benefiting tenants and local communities, and creating jobs and stimulating economic growth.

“The sale is completely unconnected with periodic rent reviews which are part of our normal business activity. Our rents are based on local property market values with the vast majority of reviews, around 85 per cent, agreed at an increase of 10 per cent or less.”

Read more: Campaign group calls on government to intervene in Network Rail arches sale