Network Rail sells all its railway arches for £1.5bn

Funds from sale will be used for planned upgrades, but tenants fear rents will rise under new ownership

Many railway arches are occupied by small businesses

Network Rail has sold its commercial property portfolio, mainly comprised of converted railway arches, for £1.46bn.

The rail operator said the proceeds will be used to fund its railway upgrade plan, “bringing major improvements for passengers and reducing the need for taxpayers to fund the railway”.

The property has been sold to investment groups Telereal Trillium and Blackstone Property Partners, on a leasehold basis, and Network Rail will retain access rights.

Network Rail’s chair, Sir Peter Hendy, said: “This deal is great news – for tenants it will mean significant commitment and investment, and for passengers and taxpayers it will mean massive, essential improvements without an extra burden on the public purse.”

David Biggs, managing director of Network Rail, added: “Ultimately our role is to run, improve and grow the railway, and managing these properties isn’t essential to that. The new owners will invest in and grow the estate, and we can focus on our core business of running the railway.”

Many small businesses and independent traders occupy the railway arches as they are cheaper than traditional commercial spaces – although rents have been rising rapidly. These companies are now worried that they will be priced out under new ownership.

Meanwhile, Mick Cash, general secretary of the RMT union, said Network Rail’s “fire sale” was “a desperate one-off measure that has the dabs of the dead hand of the Department for Transport all over it”.

“Once these properties are gone they are gone, and any organisation forced to flog off ‎an important revenue stream for a short-term capital gain to plug financial gaps is in trouble. This is an ill-conceived and panic driven measure with long-term consequences,” he said.

“The plan also stinks of creeping privatisation where the family silver is knocked down to speculators regardless of the operational, security and logistical consequences of selling off the land assets beneath the tracks.

“This plan should be stopped. Under public ownership of our railways, the profits ripped out of the system by the private train companies ‎could be reinvested ‎in trains and track avoiding the need for these panic measures.”