Hedge fund manager told to dig deep for luxury London basement
Kensington council has demanded a fee of more than £800,000 from a hedge fund manager seeking to build a vast subterranean extension underneath two adjacent west London properties.
Reade Griffith, founder of Polygon Investment Partners, and his wife want to create two underground floors including a swimming pool, spa and "treatment area" below their home.
The new basement, at about 900 square meters, is equivalent to eight average-sized new-build family houses, and is a symbol of the trend for London's most wealthy homeowners to extend downwards.
The sheer scale of the extension prompted Kensington & Chelsea council to ask for a one-off fee of £825,000 when it granted planning permission earlier this month, which will go towards affordable housing elsewhere in the borough.
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Such payments, known as "Section 106 agreements", are normally confined to large-scale commercial developments or housing estates. Their extension to domestic homes could be seen as a new tax on wealthy homeowners, who already pay 7 percent stamp duty on home purchases over £2 million.
"My goodness, I've never heard of anything like that," said Stuart Robinson, head of planning at CBRE, the global property agents. "This is completely off the scale. You don't normally get these agreements with residential applications."
The formal applicant for the project is Elizabeth Griffith, owner of the property in Ladbroke Grove. She is married to Mr Griffith, who owns the neighbouring house through a company.
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His hedge fund Polygon was one of London's most high-profile funds during the boom but became embroiled in bitter disputes following the crash. A friend of Mr Griffith said he was "surprised" by the fee.
Gary Sector, legal director for law firm Addleshaw Goddard, said the sum appeared to be "unprecedented" for a domestic renovation.
Planning requests for "dig-downs" have jumped dramatically in Kensington and Chelsea in the last decade, rising from 13 in 2001 to 307 in 2012. The trend reflects the high cost of moving house for the most affluent and the perception among many overseas buyers that London houses lack sufficient space.
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House prices in central London have wildly outstripped those in the rest of the country, with prices rising across the capital by 8.1 percent in the last year against 3.1 percent for the UK as a whole, according to official statistics.
Some boroughs are now starting to fight back against giant basements amid fears about the noise and disruption caused.
Not only is Kensington poised to restrict dig-downs but Hammersmith and Fulham has limited extensions to a single storey restricted to the footprint of the existing house excluding the garden.
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Nick Tarling, a resident representative on the local council's joint working party on digdowns, said developers were trying to rush through some huge projects before new planning restrictions kicked in.
Alan Waxman, founder of Landmass London, a residential designer and developer, said owners were unlikely to be put off by the council's levy.
"If they are building around 1,000 square meters that could be worth some £10 million, so even if it cost £4 million to do and the fee is £800,000 the owner could still double their money."
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Mr Sector agreed that the fee was not necessarily disproportionate: "We aren't talking about a loft conversion here."
Housebuilders have faced soaring claims from owners with botched basement excavations, according to figures from the National House-Building Council.
Such claims have cost builders nearly £21 million since 2005 of which £4.8 million were made in 2012, according to the NHBC data.