[2025] EWHC 2751 (Admin)

The case for the Portal Trust

The Portal Trust, formerly known as the Sir John Cass Foundation, was founded in 1748. It is the freehold owner of the Hackney Estate which was inherited by Sir John Cass, and endowed for charitable purposes. The Hackney Estate has been developed as a residential area over many years, including through the construction of numerous commercial and residential properties, for the purpose of generating income to be used for the Portal Trust’s charitable activities. The Hackney Estate is the principal source of the Portal Trust’s asset base, although it also holds a diversified portfolio of assets, most of which were acquired with income from the Hackney Estate. In 2022/23, 13% of the Portal Trust’s cash income derived from the Hackney Estate, a figure which is expected to increase on the next rent review due in March 2026.

Up to 1976, the Portal Trust managed the Hackney Estate itself. In that year, the Portal Trust entered into two leases in respect of between 512 and 550 residential properties and certain commercial properties, shop premises and development sites properties on the Hackney Estate with the World of Property Housing Trust Housing Association, later renamed the SHA. In approving the transaction, the executive committee of the Portal Trust referred to “the heavy drain on the Foundation's resources of the continuing maintenance of the Estate” and “the fact that there would appear to be no acceptable alternative expedient in the present circumstances.”

The SHA acquired the leasehold interests pursuant to those two leases (the “A Lease” and “B Lease”) with financial support from Hackney Borough Council. The leases were for a premium of £2.275m. The initial ground rent was £9,125, which was to be reviewed every 25 year based on 5% of the gross values of the properties or such equivalent as may at the time be in force.

At the time the A and B Leases were executed, SHA had no right of enfranchisement because the prevailing legislation imposed an occupancy qualification for rights of enfranchisement. That qualification was removed by the CLRA 2002.

Since 1976, development of the estate has increased the number of residential properties to 841: 335 houses, 350 flats‚138 maisonettes and 18 letting rooms in houses of multiple occupation. SHA has also expanded over the intervening period, becoming a major registered provider of social housing with 125,094 homes under management, group revenue of £1.085 billion and an operating surplus of £215.2m. The group balance sheet shows £6.3 billion of assets.

At a meeting on 25 February 2020, SHA expressed an interest in either extending Leases A and B or acquiring the freeholds of the residential properties which were the subject of the lease to improve their ability to borrow funds for the refurbishment of property (to which the limited period remaining on Leases A and B was proving an impediment). SHA has yet to make an offer for enfranchisement in either form.

The Portal Trust does not admit SHA’s right to enfranchise. However, it has submitted evidence to show that the effect of the LFRA 2024 will be a significant reduction in the amount it would receive on any enfranchisement. The Portal Trust is not dependent on enfranchisement income (para. 41 of the witness statement of Mr Foley on behalf of the Trust) and so it has not suffered a loss of revenue. But its asset value as reflected in its accounts has been impacted by the LFRA 2024. It has estimated a reduction in its asset value upon any statutory enfranchisement of the SHA leases of between 43% and 47% (principally through the removal of marriage value, but also with impacts from the Ground Rent Cap).