True Total Cost of Renting a Railway Arch

The headline rent on a railway arch is only part of the story. Your true cost of occupation includes seven distinct layers, and the total is typically 40–60% higher than the rent alone.

1. Rent

Quoted per sqft per annum, paid quarterly in advance. Ranges from £5/sqft in Leeds to £38+/sqft in Shoreditch. This is the only cost most tenants consider — but it's typically just 60–70% of the total.

2. VAT on Rent

If the landlord has opted to tax the property (The Arch Company has for most of its portfolio), VAT at 20% is added to the rent. If you are VAT-registered, you reclaim this. If not, it's an effective 20% rent increase. See the VAT section below for details.

3. Business Rates

A separate tax based on the property's rateable value. For 2026/27, the multiplier is 48.0p in the pound for standard properties and 38.2p for retail, hospitality, and leisure. Many arch businesses qualify for Small Business Rates Relief (100% relief if rateable value under £12,000).

4. Service Charge

Covers shared estate costs: £1–£5/sqft for arches. Includes communal lighting, cleaning, security, and estate management.

5. Insurance

Building insurance is typically arranged by the landlord and recharged as “insurance rent”. The Arch Company arranges building insurance centrally; Places for London has a £500 excess per claim. You also need your own contents and public liability insurance.

6. Fit-Out Amortisation

Your initial fit-out cost (£45–£175/sqft) should be spread over the lease term. A £80,000 fit-out on a 5-year lease adds £1,333/month to your effective cost. Use our Fit-Out Cost Estimator to calculate yours.

7. Utilities

Electricity, gas, water, and business broadband. Arches often have higher heating costs due to poor insulation and high ceilings. Budget £200–£600/month depending on use and size.

The Arch Company has opted to tax most of its properties, meaning 20% VAT is added to the rent, service charge, and insurance. This decision is usually irrevocable for 20 years.

Impact on Non-VAT-Registered Businesses

If your taxable turnover is below £90,000, you don't need to register for VAT. But this means you cannot reclaim the 20% VAT charged on your rent. It's an effective 20% increase to your occupation costs.

Worked Example

The non-VAT-registered tenant pays £5,720 more per year — nearly £480/month in irrecoverable VAT.

What You Can Do

• Register for VAT voluntarily if your customers are mostly VAT-registered businesses (B2B)
• Ask whether the landlord has opted to tax before signing — some properties and some landlords have not
• Factor the full VAT-inclusive cost into your business plan from day one

These examples show the true total cost for three different arch businesses. All figures are annual and based on 2026 benchmarks from our Total Cost Calculator.

1. Bermondsey Brewery (1,500 sqft)

2. Hackney Gym (2,000 sqft)

3. Manchester Workshop (800 sqft)

Beyond the recurring costs, there are significant upfront costs that many tenants underestimate. Budget for all of these before committing to a lease.

Deposit (3–6 Months' Rent)

The Arch Company typically requires 3 months' rent as a deposit. Places for London requires a minimum of 6 months' rent. For a 1,000 sqft arch in Bermondsey at £30/sqft, that's £7,500–£15,000 held by the landlord for the entire lease. This capital is effectively locked away.

Legal Fees (£2,000–£5,000)

You will need your own solicitor to review the lease (£1,000–£2,500), and most arch leases require you to pay the landlord's legal fees too (£1,000–£3,000). This is non-negotiable for most landlords.

Asbestos Survey (£300–£800)

Under Regulation 4 of the Control of Asbestos Regulations 2012, the duty holder (often the tenant under an FRI lease) must commission an asbestos management survey. Many Victorian arches contain asbestos in older linings and insulation. An asbestos survey is required by law, not optional.

Schedule of Condition (£500–£1,500)

A photographic record of the property's condition at lease start. This is your best protection against dilapidations claims. Without one, you could face claims for pre-existing defects.

Fit-Out Contingency (15–20%)

Always add 15–20% to your fit-out budget for unexpected issues. Victorian arches routinely reveal hidden problems during fit-out: additional damp, inadequate drainage, electrical supply limitations, or structural issues behind existing linings.

Total Upfront Summary