Gerald Grosvenor is considered a modest man. He sent his children to the local village primary school, does not care much for dining out and is proud of having worked his way up through the ranks to become head of the Territorial Army.
However, when he flew out to Iraq and Afghanistan in July for a five-day tour of duty, he rejected the 26-hour RAF flight made available to him. Instead, he hired a Learjet and private pilot, paying £4,000 for the round trip.
And why not? He is the 6th Duke of Westminster, Britain’s third richest man — worth £6.6 billion, according to The Sunday Times Rich List — and its richest property developer. Much of his wealth comes from the chunk of property he owns in London: his 100 acres of Mayfair and 200 acres of Belgravia makes him the capital’s biggest landlord.
Grosvenor, 54, heads one of four elite families who, together, control some of London’s finest addresses. Close behind comes the 8th Earl Cadogan, who has net assets of £1.9 billion that includes a 90-acre estate in Chelsea. Third and fourth, respectively, are the Hon Mary Czernin, 70, and the Howard de Walden family — whose holdings include Marylebone High Street and much of Harley Street — and the Portman estate, inherited by the 10th Viscount Portman, 48, and other family members in 1999 — which owns 110 acres of southern Marylebone, around Portman Square and Oxford Street, a spot beloved by celebrities including Madonna.
And then there is the royal family. The Crown Estate, worth about £6 billion, includes Regent Street, Regent’s Park and Kensington Palace Gardens. However the Queen does not benefit directly: profits go to the Exchequer and she and members of her family receive payments from the Civil List in return.
The Grosvenor, Cadogan, Howard de Walden and Portman estates were established centuries ago, largely through wise purchases and canny marriages. They have endured thanks to Britain’s tradition of primogeniture, under which the eldest son has traditionally succeeded to the entire estate and not been obliged to share it with siblings.
“The pattern that grew up in London is certainly unique,” says Liam Bailey, head of residential research at Knight Frank. “There aren’t any other cities that look like London in that they’re owned by single large families.”
Although fortunes have fluctuated over time — a previous Duke of Westminster was obliged to sell off his Pimlico estate in the 1950s to pay death duties — business for all four of the great families is booming, not least thanks to this year’s fabulous rises in the price of property in prime central London.
The Cadogan estate’s annual report, released early this month, called the past financial year “relatively quiet”. Heaven knows what it considers a busy one: pre-tax profits more than trebled to £52m and the value of its total assets rose from £1.8 billion to over £2.2 billion. In 2005, 45% of Cadogan’s holdings in capital value terms was residential property. It collects ground rent on freeholds and has about 500 houses and flats available to rent.
The Grosvenor Group reported a 7% rise in profits to £368m in 2005. Philip Beresford, compiler of The Sunday Times Rich List and this year’s Estates Gazette Rich List, estimates its 200 acres of Belgravia property alone is worth £4 billion. The Portman and de Walden estates are also thought to have had good years, although as family trusts they are not obliged to publish accounts.
“The pioneer in terms of estate management has been Grosvenor,” says Robert Bailey, a high-end buying agent. “They have been a very, very professional body for the past 15 or 20 years — they are very commercial, but very fair.”
The other estates have not been resting on their laurels, though. In the past decade, the Howard de Walden estate has transformed Marylebone, hitherto a fairly quiet part of London, into “Marylebone Village”, a bustling, upmarket community — sending residential property prices soaring.
The Portman estate — which has a third of its holdings in residential property, including more than 500 flats and houses for rent — is following suit, creating “Portman Village”, around New Quebec Street and the lower part of Seymour Place, in the heart of central London. Hugh Seaborn, Portman’s chief executive, is keen to create a sense of community. An organic butcher and an upmarket wine merchant are in place and the hunt is on for a greengrocer. “You need to make sure you have a brand, whatever happens,” he says.
Grosvenor is also developing its “brand”. In the early 1990s it developed Elizabeth Street, in the stuccoed area between Sloane Square and Victoria, into a specialist neighbourhood. It plans to do the same with Motcomb Street, between Belgrave Square and Sloane Street, which it acquired earlier this year. It has just agreed a retail tenancy for Marc Jacobs, the fashion designer, on Mount Street, the main street running through Mayfair, giving residents yet another nice local dress shop to pop into.
Earl Cadogan, meanwhile, has transformed Chelsea into one of London’s most desirable areas: his tenants looking for a night out can pop into the estate’s eponymous concert hall, while a £150m retail transformation of the old Duke of York’s barracks and parade ground at the top end of the King’s Road has added to the attraction of the swathes of residential property it owns there.
“All the estates went to sleep in the 1960s and 1970s,” says Simon Baynham, executive property director at Howard de Walden. “Now they’ve hopefully all woken up and are much more commercial in their approach.”
Their wake-up call was leasehold reform in 1993, which gave flat leaseholders the right to extend the lease or to get together with other leaseholders to buy the freehold and extended the rights of owners of leasehold houses.
Suddenly the estates risked losing their stranglehold on much of central London. The Duke of Westminster was so incensed that he resigned from the the Conservative party in protest.
In retrospect, their fears were exaggerated. Although a number of tenants have extended their leases, relatively few have satisfied the complicated requirements to buy the freehold. The Howard de Walden estate estimates only 3%-4% of its residential holdings have been bought, while Cadogan says it has sold 600 freeholds since 1993.
The Duke of Westminster has been even more successful in holding onto his property. Grosvenor’s policy of offering short leaseholds (say 60 years) meant many existing properties had leaseholds of 20 years or less — too short to qualify under the law. Cadogan, meanwhile, has bought back about 100 leasehold properties on which it owns the freehold in the past six years, and rents them out instead.
The estates (and their supporters) claim London benefits from collective ownership of some of its most expensive districts. Bailey contrasts the smart appearance of Mayfair and Belgravia, still retained by Grosvenor, with the comparative shabbiness of Pimlico, where there are many freeholders.
Stuart Corbyn, chief executive of Cadogan Estates, agrees: “With somewhere like Sloane Street, which we own, it’s like a lot of areas where an owner has a number of properties — they can make more of it in the long run than individual owners can. There are enormous areas people can buy in. But I find it difficult to understand that when someone develops a building, people should have the right to buy it.”
Not all their leaseholders agree. Dimitris Panagopoulos, 50, has owned a two-bed flat on Cadogan Square for 15 years. He loves its central location, beautiful architecture and open spaces. But he has also been locked in a dispute with Cadogan for three years, as he navigates the tricky waters of collective enfranchisement. He has finally got the numbers to force Cadogan to sell the freehold: three of the block’s five leaseholders, who each pay £160 a year in ground rent, want to buy it.
The sticking point is money: Panagopoulos and his fellow leaseholders offered £1.9m; the estate wanted £5.75m. The case went to the Leasehold Valuation Tribunal (LVT): it set a figure of £3.75m. Both sides have appealed.
Panagopoulous says the estate drives a hard bargain. “It’s been a very long and arduous process, because there are so many parameters of the equation being argued constantly,” he says. “It’s professional bread and butter for the landlord, but a complete nightmare for the guy who wants to extend his lease.
“Cadogan are very competent and very efficient at working for themselves, but at the same time they are very tough. They are running a business and trying to maximise their profit. Coming up against it is not easy; you have to be on your toes and do your homework.”
There have also been regular murmurs of discontent from rental tenants — including a public spat with Edna O’Brien, the novelist, about the cost of house repairs — and in 1996, proposals to triple some rents prompted the formation of the Cadogan Estate Statutory Tenants’ Association. By 2001 relations between tenants and landlord had become so strained that mock “Wanted” posters appeared on the estate, emblazoned with the slogan “Rachman = Cadogan”, a reference to the late Peter Rachman, a 1960s slum landlord. Still, in 2002, Cadogan’s rental income rose 15%, from £39.5m to £45.5m.
Most of the estates, however, realise that they must keep their tenants happy. “Most of our tenants can leave after six or 12 months — so if they don’t like the landlord they’re going to leave,” says Seaborn. “We make an enormous effort to connect with our occupiers and tenants, because we need to understand what they need.”
Jay Krause, 80, and his wife, Doris, 83, have had a 20-year lease on a two-bed flat in Eaton Square, Belgravia, since 1996. They pay £10,000 a year on top in ground rent and service charges. “We like the atmosphere of Belgravia,” Krause says. “It’s convenient, clean, well-ordered and very nice.” He says the estate is “fair”: “Not cheap, but you get what you pay for.”
Tom and Julie Alfred have rented a two-floor, four-bed Harley Street maisonette from Howard de Walden for 10 years. Rent is £37,000 a year; it has risen 2.25% annually. “I can either rent or not rent,” says Tom. “I would have bought if it was available and I could afford it. But the family owns it and I accept that — I don’t think it’s right that someone should force someone else to sell a property.”
These aristocratic landlords will hang on to their property for all they are worth. They must not only protect their tenants but ensure there is something to pass on to their heirs. “We’ve been here for 500 years and we want to be here for another 500 at least,” says Seaborn.
Whether they stay put through commercial savvy, going for the landlord-of-the-year vote or simply refusing to let go of what they see as theirs by right, their future seems fairly assured.
As Beresford says, “These are people who will be in the Rich List until an atomic bomb hits London or a Bolshevik revolution strips them of their assets.”
