The case concerned 16 residential flats in the City of Westminster, that were the subject of affordable housing obligations in a section 106 agreement (<strong>the S106</strong>) entered into with Westminster City Council (<strong>the Council</strong>) in 2013.

In 2015 the developer granted 125 year leases of the flats to a registered provider of social housing, who the following year transferred the flats to Kinsman, another registered provider.  In 2023, the Regulator of Social Housing took the decision to de-register Kinsman from the register of social housing providers.  This qualified as an event of default under a third party legal charge and the chargee exercised its power of sale, assigning the 16 leases to Gem House Residences (<strong>Gem</strong>) for £12.6m.

Gem intended to let the flats out at market rents on the understanding that the S106 affordable housing requirements had now fallen away. This prompted the Council to issue proceedings seeking a declaration and injunction that Gem was bound by the affordable housing obligations in the S106 with an interim injunction being granted in October 2024.