London Social Housing Tenants Facing Homelessness After Homes Sold
London social housing tenants facing homelessness at a block in Marylebone say they have been left in limbo after 16 homes intended as affordable housing ended up in private ownership.
Residents at Gem House on Chiltern Street say their new private landlord has demanded dramatically higher rents or told them they will have to leave. One family says its monthly rent would rise from £793 to £6,850—more than eight times its current social rent.
The situation follows a long-running legal dispute involving Westminster City Council and a clause in the original planning agreement for the development. The council tried to prevent the properties from being converted to market-rate rentals, but its case ultimately failed at the Court of Appeal.
Residents now fear they could become homeless within days, while some families say they still do not know where they will live after leaving Gem House
What Happened at Gem House in Marylebone?
The dispute centres on 16 flats at Gem House, 76 Chiltern Street, in one of London’s most expensive areas.
When Westminster City Council approved the wider development in 2013, a Section 106 planning agreement required 16 of its 60 flats to be used as affordable housing. The agreement required long leases on those affordable units to be granted to a registered social housing provider, which would then rent them to tenants below market value.
That arrangement appeared to protect the flats as affordable homes.
But the agreement contained an exemption for a mortgage lender and anyone who later acquired title through that lender.
That provision eventually became crucial.
The registered provider that later owned the flats, Kinsman, was removed from the register of social housing providers in September 2023. That triggered a default under its mortgage arrangements. The mortgagee subsequently exercised its power of sale, and in February 2024 the leases were transferred to a private purchaser.
The properties were reportedly sold for £12.6 million.
What had been affordable homes could consequently be moved into the private rental market.
Why Is Westminster Council Being Blamed?
Residents and opposition councillors have described the situation as a council “blunder” because of the wording of the original Section 106 agreement.
The council itself did not voluntarily decide in 2026 simply to sell its tenants’ homes to a private landlord.
The actual sequence is more complicated.
The affordable homes were owned by a registered social provider, which had financed the acquisition. The original 2013 agreement contained a clause protecting a mortgagee—and those deriving title through it—from certain affordable-housing obligations.
After the social housing provider was deregistered and the lender exercised its power of sale, the purchaser argued that it benefited from that exemption.
Westminster Council disagreed and went to court.
The dispute therefore came down to whether the affordable-housing restrictions still applied to the new owner.
Court of Appeal Rules Against Westminster Council
The council’s attempt to preserve the flats as affordable housing eventually reached the Court of Appeal.
In its July 2026 judgement, the court examined the precise wording of the 2013 Section 106 agreement and the mortgagee exemption.
Westminster lost.
That means the current owner is not bound by the affordable-housing restriction in the way the council had argued and can let the properties at market rents.
The decision has potentially important implications beyond the immediate dispute because mortgagee-exclusion clauses are a familiar feature of affordable-housing agreements.
But for the people actually living at Gem House, the legal argument has a much more immediate consequence:
They may lose their homes.
Family Says Rent Would Jump From £793 to £6,850
One family’s experience illustrates the scale of the difference between social and market rent in central London.
Mr and Mrs Banjak live at Gem House with their three children.
According to the Local Democracy Reporting Service, they say they have been asked to pay £6,850 a month, compared with their existing social rent of £793.
That is an increase of more than £6,000 every month.
Unable to afford the new rent, the family is facing eviction at the end of August, subject to an ongoing legal case.
Their story is particularly striking because the family had already spent years in temporary accommodation.
Mr Banjak, a former Transport for London bus driver, stopped working after suffering a stroke. His family spent 12 years in a one-bedroom temporary home in Westminster before finally moving into Gem House in 2019.
They believed they had finally found permanent affordable accommodation.
Now they are preparing to move again.
Children Face Uncertainty Over Schools and Friends
Housing instability affects far more than someone’s address.
The Banjaks’ three children are still in education, and their mother told reporters that the family cannot prepare them properly for moving because they do not know where their next home will be.
That uncertainty creates practical problems involving schools, travelling times and children’s friendships.
If a household relocates to another part of London—or even outside its existing borough—the disruption can be considerable.
For families who have already spent years in temporary accommodation, the prospect of entering the homelessness system again can be particularly distressing
Disabled Tenant Fears Being Moved Away From His Support Network
Another Gem House resident highlighted a different problem that possible relocation could create.
Mahmoud, 60, lives in the building with his two children and is disabled. He told reporters that he relies on a relative living nearby to help with his care.
Being rehoused far away could therefore affect more than convenience.
It could disrupt an existing care network.
His son, who attends university, also said the uncertainty had affected his studies.
Another resident described the experience as traumatic after approximately two years of instability over whether the family would be allowed to remain.
These cases demonstrate why the location of replacement housing matters almost as much as whether accommodation is ultimately provided.
Tenants Told to Make New Homelessness Applications
One of the most controversial aspects of the situation concerns what happens next.
Westminster City Council has told affected households that they must make new homelessness applications to be considered for rehousing.
Some residents argue that the requirement is unfair.
They say they were originally placed in Gem House through affordable-housing arrangements and are now losing their homes through circumstances entirely outside their control.
They therefore believe Westminster should make direct offers of suitable replacement accommodation rather than requiring them to go through the homelessness process again.
For families approaching eviction dates, the administrative process adds another layer of uncertainty.
Westminster Has More Than 6,500 Households on Housing Register
The council faces another problem: an enormous shortage of affordable homes.
Westminster City Council says more than 6,500 households are currently on its housing register.
That helps explain why promising immediate permanent replacement homes is difficult.
Demand for affordable housing in central London vastly exceeds supply.
But critics argue that the Gem House tenants are an exceptional case because they are not simply applicants seeking social housing for the first time.
They were already living in affordable homes and are losing them because the legal restrictions failed to keep the properties in the affordable sector.
That difference is at the heart of the political argument.
Labour Councillor Says Westminster Must Take Responsibility
Labour councillor Concia Albert, the opposition’s shadow cabinet member for housing services, has called on the Conservative-run council to take responsibility.
She argues that residents were placed in Gem House by Westminster on the understanding that the properties were affordable homes and should not suffer because of a legal arrangement they could not control.
She has called for the council to offer affected residents suitable and secure replacement accommodation within Westminster.
That last point matters.
Moving a family from Marylebone to a distant borough may technically provide accommodation, but it can separate children from schools, adults from employment and disabled residents from family support.
What Does Westminster City Council Say?
Westminster says it did try to stop the loss of the affordable homes.
The council began legal action against the landlord in 2024, challenging the attempt to move the Gem House properties out of affordable housing. It says it believed that keeping them affordable was best for the community.
After losing the legal battle, the council says it recognises that residents are experiencing an unsettling period and is working with affected households by providing housing advice and support.
However, the council did not commit in its statement reported by LDRS to giving every affected tenant a direct replacement home.
That leaves the central dispute unresolved.
Residents want certainty.
The council faces severe shortages.
And eviction deadlines are approaching.
What Is a Section 106 Agreement?
Understanding this story requires understanding Section 106 agreements.
Under the Town and Country Planning Act 1990, councils can enter planning obligations connected to developments.
These agreements can be used to secure affordable housing and other community benefits when developers receive permission for major projects.
At Gem House, the 2013 agreement required 16 of the development’s 60 flats to be affordable housing.
However, affordable-housing developments often require financing.
Lenders generally want protection in case a housing provider defaults because they need to know that they can recover money secured against the property.
That is why mortgagee-exclusion clauses exist.
The problem in this case was what happened when the protection designed to make financing possible ultimately allowed the affordable-housing restriction to fall away after the lender sold the leases.
Could the Gem House Case Affect Other Affordable Homes?
This issue may become the biggest longer-term question.
Mortgagee-protection clauses are not unique to Gem House.
They are used because registered housing providers often need private finance to purchase or develop affordable properties.
The Gem House litigation demonstrates the tension between two objectives:
protecting lenders sufficiently to make affordable-housing projects financeable, while also protecting the affordable status of homes over the long term.
The Court of Appeal ruling turned on the wording and legal effect of the particular agreement, so it would be wrong to suggest that thousands of social homes can suddenly be converted to private rent.
Nevertheless, councils and housing lawyers are likely to pay close attention to the judgement when drafting future Section 106 agreements.
London’s Wider Social Housing Shortage Makes the Case More Serious
Gem House is a small development involving 16 affordable properties.
In a city the size of London, that number might initially appear insignificant.
But every lost social or affordable home matters when demand is already extraordinarily high.
London City Hall acknowledges that demand for social housing substantially exceeds supply, with housing mobility opportunities extremely limited for many tenants.
The wider private market offers little relief for low-income households.
Research by Trust for London found that 45,000 private rental properties left London’s rental market without replacement between April 2021 and December 2023, with losses particularly significant in more affordable areas.
The Gem House case is therefore unfolding inside an already severe housing shortage.
Social Rent Versus Private Rent in Central London
The jump from £793 to a claimed £6,850 monthly rent demonstrates the enormous divide between social housing and central London’s private market.
Social rents are designed to remain substantially below market prices.
Private rents, by contrast, reflect market demand.
In areas such as Marylebone, where property values and rents are exceptionally high, the difference can be enormous.
This means simply converting an affordable flat to a market-rate property can effectively make it impossible for the existing low-income household to remain.
The building does not change.
The tenant’s needs do not change.
But the economics of occupying the home change completely.
Why Gem House Has Become a Political Issue
The controversy raises an uncomfortable question for councils:
How permanent is an affordable home if its legal protections can eventually disappear?
Councils often rely on private developers and housing associations to deliver affordable homes through planning agreements.
If those homes can later leave the affordable sector following financial failure and a mortgagee sale, local authorities may need to examine whether stronger safeguards are possible.
The political stakes are particularly high because councils frequently celebrate new affordable housing numbers when they approve developments.
Residents reasonably expect those homes to remain affordable according to the promises made when they move in.
Gem House demonstrates what can happen when that expectation collides with complex property and financing law.
What Happens to the Gem House Tenants Now?
The immediate future remains uncertain.
Some residents face eviction as early as the end of August.
Affected households are being asked to make homelessness applications to Westminster.
The council must then assess individual circumstances and determine what assistance is owed under homelessness legislation.
But residents are calling for something more straightforward: replacement secure housing without being forced through another lengthy period of uncertainty.
Whether Westminster ultimately provides it remains one of the most important developments to watch.
Conclusion
London social housing tenants facing homelessness at Gem House have become caught in the consequences of a legal dispute they played no part in creating.
A 2013 Section 106 agreement originally protected the 16 Marylebone flats as affordable housing. After the registered social housing provider lost its registration, the mortgage lender exercised a power of sale, and the properties moved into private ownership.
Westminster City Council attempted to preserve the affordable-housing restrictions through legal action but ultimately lost at the Court of Appeal.
Residents are now confronting the consequences.
One family says its rent would increase from £793 to £6,850 a month, while other tenants fear being moved away from schools, relatives and essential support networks.
The council says it is working with residents but faces intense demand, with more than 6,500 households already on Westminster’s housing register.
For the families at Gem House, however, the argument is simpler.
They believed they had finally secured affordable homes.
Now, through no decision of their own, they face entering the homelessness system again.
And the case leaves London with a much bigger question: if an affordable home can lose its protection in circumstances like these, how should councils ensure the same thing does not happen elsewhere?
Frequently Asked Questions
Why are Gem House tenants facing homelessness?
Sixteen flats at Gem House were intended for affordable housing, but after the registered housing provider was deregistered, its mortgagee sold the leases. A court dispute over whether the affordable-housing restriction continued to apply ultimately went against Westminster Council.
Where is Gem House?
The affected Gem House is at 76 Chiltern Street in Marylebone, Westminster, central London.
How many affordable homes are affected?
There are 16 affected flats. The wider development contains 60 flats.
How much could tenants’ rents increase?
One family says it was asked to pay £6,850 per month, compared with its existing social rent of £793.
Did Westminster Council sell the homes?
The situation is more complicated than that. The flats were held by a registered social housing provider. After that provider was deregistered, its mortgagee exercised its power of sale. The council subsequently took legal action attempting to preserve the affordable-housing restrictions but lost.
What is Westminster doing for affected tenants?
The council says it is working with affected households and providing housing advice and support. Residents have been told to make homelessness applications, while some are demanding direct offers of replacement accommodation.
