Many businesses in London have expressed concerns that rising rents could cause them to relocate outside of London.
Research by the New Economics Foundation has found that rent increases of up to 350% have been reported in London. They fear that rent increases are pushing businesses away from London, particularly in the East End.
Network Rail, ahead of selling off their commercial property holdings, have increased rents sharply. Some rents have increased by 200% and have caused tenants to go to legal arbitration to have rents fixed by an independent body.
Network Rail says that selling off their commercial property portfolio will raise money for rail infrastructure improvements. Critics say that rents have risen to add value to properties to increase the money raised by the sale, but Network Rail has denied this is the reason for the rent increases.
Mirajul Choudhury, a London business owner, told Parliament:
“We had discussions with [Network Rail] and they refused to cooperate. Their final conditions were a 250% increase backdated to 2016. That will put us out of business.”
The East End Trades Guild has proposed a ‘London working rent’ that will fix affordable rents for the smaller business. They also want Small Business Community Land Trusts to be formed that reserve land for small business use.
If small businesses exit London, this could actually benefit commercial property investors who purchase property outside of the capital. Commercial mortgages at low interest rates are available to finance new property purchases outside of the capital.