The Bell Hotel case: what every hotel owner needs to know

The High Court and Court of Appeal decisions over the last few weeks around the potential closure of the Bell Hotel in Epping have dominated headlines, with political debate focusing on asylum-seeker housing. But beyond the politics lies a pressing commercial reality for hotel owners: what does this mean for asset value, financing models and long-term contracts?

In Epping Forest District Council v Somani Hotels Ltd [2025] EWHC 2183 (KB), Mr Justice Eyre granted an interim injunction in the High Court under section 187B of the Town and Country Planning Act 1990, ordering that the Bell Hotel cease housing asylum seekers by 12 September 2025.

The council argued that the hotel’s use had shifted from C1 (hotel) to either C2 (residential institution) or sui generis, requiring planning permission which had not been obtained. The High Court applied the American Cyanamid test and weighed public interest: while accommodating destitute asylum seekers is important, enforcing planning control and preserving local amenity weighed more heavily in this case.

Somani Hotels, the owners, joined with the Government to appeal the decision and won their challenge at the Court of Appeal at the end of last week, with Lord Justine Bean stating the High Court ruling had been ‘seriously flawed in principle’. While the social debate looks set to continue, hotel owners will undoubtedly be breathing a sigh of relief.

Key takeaways for hotel owners

1. Asset values depend on contract security
Many hotel owners have stable, long-term contracts with public bodies like the Home Office or its contractors, providing steady annuity-style income. A premature termination, or a forced closure due to planning enforcement, could significantly derail that revenue stream, affecting earnings and debt servicing ability.

2. Forced sales and market glut risk
If contracts are cancelled and hotels cannot service their debts, owners may face distress sales, triggering a glut of former asylum-use hotels on the market. Buyers are likely to view these properties with caution, they may need substantial capital expenditure to refurbish, reconfigure, or restore use as mainstream hospitality assets.

3. Planning risk is fact-sensitive, not generalised
It is crucial to remember the Bell Hotel judgment turned on its specific facts and planning history. Other cases, such as Fenland or Ipswich, had different outcomes where no planning harm was found or where continued use was allowed. There is no blanket rule that all hotels used for asylum-seeker accommodation fall foul of planning control.

What this means for your business

If your hotel portfolio includes asylum-use contracts:

• Review your planning status: check whether your current use might constitute a material change that requires permission under the Town and Country Planning (Use Classes) Order.
• Audit your contracts for early-termination provisions: determine whether force-majeure, planning-compliance or notice terms could trigger cancellation or leave you exposed.
• Stress-test your balance sheet: evaluate how vulnerable you are to a sudden income stop—can you service debt or cover costs without the contract? Could you find alternative occupiers?
• Prepare for repositioning scenarios: start assessing capital requirements to convert the asset back to a traditional hotel or alternative use should the asylum-use model become untenable.
• Engage early with planning authorities: seeking pre-application advice or a retro-planning permission may de-risk the position and avoid enforcement action.

The Bell Hotel case shows how quickly political decisions and planning law can affect hotel valuations and financing. While this is an interim ruling based on unique facts, it signals greater scrutiny of asylum-use hotels. Now is the time to strengthen your planning position, protect income streams and safeguard assets.

For more information, please contact our hotels team.