Leaseholders in east London have said they are “trapped in unsellable homes” because of an £850,000 debt owed by the building's developer to Hackney council, which has remained unpaid for eight years. The 17 leaseholders, who live in a block of flats in Upper Clapton, have appealed to the council for help but their pleas, including requests for a meeting, have been ignored.
Rich Bell, 38, is one of the owners. He was expecting to move out of his one-bedroom flat last year, having outgrown it after the birth of his first child. He was in a “pretty advanced stage” of the selling process but was halted when solicitors discovered that the building's developer, Restoration Hackney, had failed to pay more than £850,000 in Section 106 contributions and community infrastructure levies. This unpaid debt meant that, if Restoration Hackney went bankrupt, leaseholders would be responsible for the bill.
Bell said his lawyers were “convinced for a long time that it was just an administrative error” but it soon “became clear that it wasn’t an error and this was the reality”. The buyer of Bell’s flat was advised by his solicitors that he would not be able to get a mortgage on the property because of the risk of being liable for the debt. “Understandably, he had to pull out,” said Bell.
Other leaseholders in the block have also been unable to sell their homes because mortgage providers are unwilling to lend on any flat in the building. Bell said his neighbours, including families, have been “effectively trapped in unsellable homes” by the council’s inaction. The debt has been owed since June 2017 after the 14th flat was sold, before the block was completed the following year. The council issued a debt collection notice in October 2018 but took no action for nearly another six years, waiting until February 2024 to issue another notice. The bill remains unpaid.
Leaseholders have appealed to Hackney council to issue a guarantee that they will not pursue them for the freeholder’s debt, which would allow them to sell their flats. The council has so far refused to provide such a guarantee and has also refused to meet affected leaseholders. Bell remains stuck in the one-bedroom flat with his wife and two-year-old son. “We feel that we need more space. We’re still sharing a bedroom with him but we would really like to be able to give him one of his own,” he said.
A Hackney council spokesperson said: “We understand the frustration of leaseholders facing difficulty selling their properties as a result of the previous and current freeholder not paying substantial contributions due to the council. We have an obligation to make sure all developers that build in the borough pay to help maintain the services and the infrastructure relied upon by residents. There has been a change of freeholder of the block and neither the previous, nor the current owner has yet paid the amount that is due, despite us contacting and meeting with both. We will support residents however we can. Unfortunately, we are unable to provide the guarantee requested as it would place the burden of the debt on the council.”
