1996 is the date of the second arson attack which made Dollis Hill House beyond use. At this point, the London Borough of Brent put in a joint bid for Dollis Hill House and Gladstone Park to the Heritage Lottery Fund Urban Parks Programme, but it was informed that an historical landscape survey was required. It also became apparent that the Council could not identify sufficient funds for the matched funding, approximately 25% of the overall cost of approximately £2 million for the house, but that it could meet the matched funding for the park-only element of the bid. The Council is not able to attract funds from charities to find this matched funding, but a charitable organisation running Dollis Hill House would be able to attract such funding, enabling it to submit a lottery bid if the Council then gave it control of the house.
Once Brent Council realised that it could not submit a lottery bid for the house, it considered marketing the house or demolishing it. Both of these options appeared to contravene the wording in the conveyance of the house and land to Willesden Urban District Council in 1900 which says it should be 'for the perpetual use thereof by the Public'. When the Council attempted to market the house, the only financially viable proposal was from a brewery. In a large scale consultation exercise, the local people opposed both the brewery and the demolition, but a great groundswell of support for setting up a charity was generated, with lots of press coverage. Some representatives of local groups then put a proposition to the Council for its support and some time to start setting up a charity. The Council gave only until the end of January 2001 in the first instance, with 8 further months if progress warranted it. The Dollis Hill House Steering Group was set up at a large public meeting on 30 October 2000 attended by over 80 people who offered involvement, followed by the Dollis Hill House Trust in January 2002.