Council secures interim injunction in bid to keep affordable homes subject to section 106 agreement

The city council is seeking to ensure that the properties remain affordable housing in accordance with the section 106 agreement after the flats were sold to a new property owner who sought to evict the tenants.

Westminster granted planning permission for the development in 2013, subject to a section 106 agreement requiring 16 flats within the development to be used as affordable housing, comprising 10 social rented units and six intermediate rented units (AHUs).

The AHUs were initially used as affordable housing until the housing provider, Kinsman Housing Ltd, was de-registered by the Regulator of Social Housing in September 2023.

The AHUs were then sold on the open market by Kinsman's mortgagee, in purported exercise of its power of sale under the legal charge.

A real estate investment company bought the properties and the new owners' managing agent later served section 21 notices on all the social tenants requiring possession.

On 30 April 2024, Westminster City Council brought a claim in the High Court, Chancery Division, seeking a declaration that the new owners were bound by and an injunction to enforce the affordable housing obligations in the section 106 agreement.

The new owners defended the claim but did not proceed with the threatened evictions.

In August, they let one of the AHUs, which was vacant, at a market rent.

Matt Hutchings KC of Cornerstone Barristers, and Michael Feeney of Francis Taylor Building are representing the council.

They are instructed by Kim Painter and Kirsten Chohan, of Bi-Borough Legal Services, Kensington and Chelsea Council and Westminster City Council.

Hutchings said: "The key issues in the claim concern the interpretation of the mortgagee exemption clause, which exempts from the affordable housing obligations any mortgagee of a registered provider and persons claiming through them.

"By the time the AHUs were sold, Kinsman was no longer a registered provider. Westminster City Council's case is that the mortgagee exemption clause had ceased to apply.

"The legal argument concerns contractual interpretation in the context of the statutory moratorium on the disposal of social housing assets under s. 145 of the Housing and Regeneration Act 2008."

At the hearing on 30 October 2024, Mr Justice Edwin Johnson delivered a judgment finding that Westminster City Council had discharged the onus of showing that they had a real prospect of success on the interpretation issue and granted an interim injunction until trial.

Adam Carey