Radchenister's advice is the best to start with.
You may not get a lot of initial joy with the police as its verging on a civil matter - this doesn't mean they won't be able to do anything, but for he police to be involved they have to be satisfied that there is a crime (theft) and two plausible (if not reasonable for you) excuses as to why he couldn't return it don't quite add up to it. After Radchenister's suggestion, that should however be enough if he's still making excuses. If you do phone for police help, mention its not a 'proper' business and he just works from his basement as this muddies the waters somewhat too.
Personally though, I'd play it by a different tact. I'd send him a letter (recorded delivery) stating that you will be round at a particular time, on a particular day (make it reasonable) to pick the bike up, after the two previous failed attempts. After this day, you will charge him £20 a day to cover travel costs whilst you don't have the bike, which you will be claiming through the small claims court. I bet he will give it back then like a shot.