A tramp who squatted for 20 years in one of London’s most expensive suburbs has been awarded the deeds to a plot that could be worth £3 million.

Harry Hallowes, 70, now owns the 60ft-by-120ft (20m-by-40m) site on Hampstead Heath in North London. He has lived there in a tiny shack since 1986. His home is in the grounds of Athlone House, a former nursing home in Highgate, which a developer is converting into luxury flats.

The decision brings to an end a three-year legal battle. The company behind the scheme took court action against Mr Hallowes in 2005 but failed to evict him. That hearing was told that he had, by then, lived on the plot for 18 years. This went unchallenged and became the basis for his title claim to the land.

Mr Hallowes, whose friends in the area include the Monty Python star Terry Gilliam, said: “This has been my only home for 20 years. I absolutely love it here. I always expected to be given the deeds. I have got my deeds locked up safe and sound. Maybe I’ll build myself a house to live in — everybody else around here seems to love building houses. I won’t be having a bird sanctuary or anything like that.”

The deeds are for a fenced area on the heath. Maurice Evans, Mr Hallowes’s solicitor, said yesterday: “At one stage the company which owned Athlone House needed vacant possession of the land.

“Mr Hallowes was successful in fighting that action and, from that, it automatically followed that he had a right to the land.”

At the court hearing, Dwyer, the developer, tried to have Mr Hallowes removed. Evidence was presented that showed that he had lived on the land for 18 years.

Residents’ groups voiced concerns about the nature of the development when Dwyer unveiled its plans. The Athlone House working group was set up, forcing changes to the proposals and successfully negotiating for a hectare of the grounds to be given to Hampstead Heath.

Dwyer and the City of London Corporation agreed that Mr Hallowes could stay but that, if he left, the land would be given to the heath. The plot has now been awarded to Mr Hallowes to sell or to to pass on, although he is never likely to win the planning permission that he would need to make the plot attractive to buyers.

A Corporation spokeswoman said: “The piece of land that Harry is currently on is very small and was never planned to have public access. Nevertheless, we need to investigate any potential implications for us.”

Farlane Harris, finance director at Dwyer, said: “This is not a problem for us. All we would have done is comply with the agreement we had with the Corporation.”

An eccentric MP successfully claimed squatters’ rights three years ago in the same London borough. “Rainbow” George Weiss, of the Make Politicians History party, won ownership of a mews house in Hampstead after living there without paying rent for 12 years. He sold the house, netting £710,000, but has since spent nearly the entire amount on his election activities. Mr Weiss said: “I wish Harry all the best. He is a truly lovely man. But I hope he is far wiser with his windfall than I was with mine.”

A planning application in 2005 proposed renovating and extending Athlone House — constructing 25 residential units with parking at the derelict hospital site. Ken Livingstone, the Mayor of London, recommended that car parking should be reduced and that work should be done to mitigate the impact on biodiversity.

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