How to Buy or Build a Miniature Railway

BUYING A MINIATURE RAILWAY

Buying is the easiest and fastest way if you have the necessary funding.

Miniature Railways are either advertised as for sale by their owners usually in the heritage railway press or sold by private negotiation. Sometimes an existing railway is let on a concession which is publicly advertised as being available. 

The normal steps, as with any business purchase, would be to research the railway’s finances, asset ownership, existing land leases if any and planning/other permissions,

Look at the obligations on you under any concession agreement or lease. One recently advertised concession had a daily penalty of £750 if the trains did not run for any reason!

If the railway runs on leased land you will require the landlords consent to the transfer of the lease. This may take some time and they will probably want to meet you to size you up.

If you approach an existing operator please do use tact and make a private approach. I have had people come up to me on a busy day in front of all the volunteers and say. I’d like to buy your railway! Of course the answer is “it’s not for sale”

BUILDING A NEW MINIATURE RAILWAY

Step 1.  is probably to find a site which has good potential traffic. If its owned by someone else an early indication of their interest is sensible . If its positive you will need to pursue step 2 quickly

Step 2.  is to prepare a business plan which sets out projected income from passengers and any other revenue from catering and sales of souvenirs etc.. But be careful to ensure you have planning permission and landlord’s consent for these activities – some railways are prohibited under the terms of their lease from running a shop or café. The key issues will be how many days will the railway run and how you will find staff for a business that offers only seasonal employment.

Fare income ( will fares zero rated – possible if the railway fulfils a transport function and single fares are possible)

Plus

Catering income.

Sales income ( if any)

The running costs need to be calculated. Here the best course is to seek advice from existing operators on costs and will need to include:

Staff, supplies, fuel, rent, rates, insurance, advertising, promotion, stationery, telephones, bankcharges, repairs, electricity, water, insurances, travel, financing costs etc

This needs to be done honestly – you are only kidding yourself if you make the two sides balance and you will pay the price later.

The likely passenger traffic and number of days running will inform the choice of gauge. Broadly costs increase significantly from 7.25 inch gauge to 10.25/12.25 inch gauge then again to 15 inch gauge

A significant issue is will simple planning permission be required or a Transport and works order( TWO)? This will be required for 15 inch gauge railways on public land and for some other smaller railways which cross public roads. This is a difficult area as the costs are very high and the needs unclear. Seek advice if in doubt.

Calculate the costs of construction, equipment and working capital. Can you raise the required capital? It will be difficult to obtain bank finance for this sort of scheme to put it mildly.

The next step if it adds up is to negotiate with any landowners for a formal lease if possible. Some landowners will want to give a concession. This needs to be considered very carefully as the legal position is different and if a significant investment is being made a concession is not advisable.

Do some research about what obligations existing railways have to give you ammunition to argue with. Recent examples of draft terms tend to have masses of obligations placed on the lessee. Older leases are somewhat more even handed.

Almost all miniature railways built in the last 10 years have been of 7.25 inch gauge.

Miniature Railways in the UK