Rent hikes - biggest threat to East London's independent businesses
Landlords demanding astronomical rent increases from small businesses are eroding East London’s communities and way of life.
That’s the claim by The East End Trades Guild, which represents more than 250 independent businesses in the area. They say one trader was driven to suicide, others have left town after decades in business here and many more have huge worries for the future.
One Bethnal Green businesses has been threatened with a 275% rent hike or evection, Network Rail’s sale of commercial spaces to Blackstone could impact many local businesses and others ready to expand are struggling to find affordable space.
Krissie Nicolson, Director of the East End Trades Guild, said: “If space is eaten up by the biggest companies who can afford the highest rents it undermines the way we live and the way we work. It’s eroding our communities and our way of life.
(Krissie Nicolson. Photo credit: Marcus Duran)
“What we are battling against here is a very old system – a property market culture that’s all about divide and conquer. Many commercial spaces are owned by investors, businesses whose job is to get as high a return as possible. Agents get a cut for negotiating high rents – each time a new tenant comes they get another cut, so you end up with churn and a high turnover of businesses. In areas like Spitalfields we end up with big brands who see the shops as more about presence and advertising than actually selling anything. When they agree to pay the big rents, it screws everyone else over because landlords use that data to show the market value has gone up and then they increase rents.”
Landlords typically use ‘market rental value’ as justification for increasing rents – market rents are supposed to be a fair picture of actual levels in an area. But a culture of secrecy by businesses over the rents they pay means, by only referencing local units with higher rents, landlords have carte-blanche to implement rent increases which are out of sync with true local values.
It means there are some streets where comparable units could rent for £20,000 per year or £50,000 per year. And it’s a double-whammy; if the rent goes up, so ultimately will business rates.
Now a revolution is underway to give small businesses the power to fight against unfair rent increases. It’s being led by the East End Trades Guild who are developing an app as a register of landlords, through which businesses can note the rent they pay. The Guild is working closely with TFL, Hackney and Tower Hamlets Councils to input rental charge data for publicly owned business units.
Working in this way the Guild hopes to get a truer picture of local market values, which can be used by businesses to resist unreasonable rent hikes.
Basil Fansa of the Local Buyers Club, said: “Small traders account for 99.7% of all businesses in Hackney and over 97% in Tower Hamlets – they provide half the employment across two of the city’s poorest boroughs. They’re the reason for the character, quality and vibrancy of our communities – yet a flawed system is putting their futures at risk. The property market has been distorted by a prolonged period of exceptionally low interest rates. Asset owners, and large corporates with access to cheap finance have benefited but the majority have lost out. Joining forces, sharing data and campaigning as one offers a chance to redress the balance. But ultimately small business survival will also depend on people making a concerted effort to support their local independent businesses.”
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