Case Summaries
Previously, the House of Lords gave some guidance on the meaning of a house for the purposes of the Act in Tandon Trustees v Spurgeon Homes (1982) and concluded that mixed-use buildings that comprised part residential and part commercial may qualify, provided the building was also a house “reasonably so called”.
The consequence of this is that the familiar sight of a high street shop with residential accommodation immediately above could constitute a house within the meaning of section 2(1).
When is a house a “house”!
Despite Tandon no Court had looked solely at the interpretation of “designed or adapted for living in”.
That was until the case of Boss Holdings Limited –v- Grosvenor West End Properties and Others [2008].
Boss Holdings Limited (“Boss”) were the tenants of a property in Upper Grosvenor Street, London W1. The property had been built in the eighteenth century as a house and had been occupied as such until the 1940s. Between then and the 1990s the lower floors were used for commercial purposes, offices, and the upper floors as residential flats. At the time Boss served its notice under the 1967 Act seeking to purchase the freehold the property was empty and somewhat dilapidated. Grosvenor West End Properties (“Grosvenor”) objected alleging that Boss did not have the right to enfranchise as the property did not fall within the definition of “house” within section 2(1) as set out above. Boss brought proceedings seeking to uphold their right to enfranchise.
The county court and the Court of Appeal both dismissed their application. The Court of Appeal stated that the test was a simple one – “whether the premises (or at least a substantial part) viewed as at the moment the notice is given, were designed or adapted for living in. Is residence the purpose of the design or adaptation at the time of the notice?”
The House of Lords disagreed. In essence it decided that a property, which had originally been designed as a house but later used commercially, was a “house” for the purposes of the right to enfranchise under the 1967 Act. “Designed” should be given its natural meaning of referring to the past as it was in the past tense. It was the original purpose for which the property was designed that mattered, not its use at the time the tenant’s notice to enfranchise was served. Boss had served their notice in October 2003.
The result?
1) if the purpose when the property was first built was for it to be lived in as a house, even if subsequently it had been adapted for mixed residential and commercial use, it can still be a “house” within section 2(1);
2) the fact that the property had become so dilapidated as to be uninhabitable did not override that the property was designed for living in when it was first built.
The House of Lords considered the position of properties designed as houses but later adapted for commercial use throughout, particularly where the external appearance and original layout has not been altered or altered substantially, and decided they may still be houses under section 2(1).
Does this mean that the tenants of the many large houses in Central London and elsewhere now used as shop, offices, doctor’s surgeries, dentist’s practices etc. now have the right to enfranchise under the 1967 Act?
Not enough of a house
This is another case on section 2(1) Leasehold Reform Act 1967 - the definition of a ‘house’ for the purposes of leasehold enfranchisement.
Grosvenor Estates Ltd v Prospect Estates Ltd [2008] is a Court of Appeal case on the statutory right of the long lease tenant - Prospect Estates - to acquire the freehold of 132 Ebury Street, SW1. The property was built as a house for living in about 1850. The only major structural works since that date were the addition of a third and fourth floor. Since 1965 the top floor was used as residential accommodation, with the remaining 88.5% of the property used as office space, under short term sub-leases. The lease specified that the fourth floor was to be used as private residential accommodation in the occupation of a
director, partner, officer, or senior employee of the company, organisation or firm occupying the rest of the premises. The remaining floors could only be used as business or professional offices. However, any external indication that the building was commercially used was prohibited, including a requirement that windows should be furnished like a private dwelling.
The Judge in the court below viewed the property inside and out. The court found that, notwithstanding the terms of the lease, the property was a house, following what was taken as the test in Tandon case. That “nobody could reasonably call the building a house” for a judge to hold it wasn’t a house.
On appeal, the appellant accepted that there were insufficient works of adaptation to stop it being designed for living, but contended that it could not be a house ‘reasonably so called’. The appellant sought to distinguish Tandon - the judge had erred in finding that the unchanged original design of the building was the decisive factor. Little or no weight had been given to the fact that at the relevant time the ‘greater part of the building was not used and could not be lawfully used for residential purposes’.
But, the change of use to mixed residential and commercial was not an exceptional circumstance.
However, it was held that the history of cases since Tandon through the Courts showed the difficulty of achieving the desired consistency of outcomes. While it was a strong thing to say that ‘nobody’ could reasonably call this building a house the appeal court considered that the Judge had failed to consider the “peculiar, even exceptional” circumstance of the prescribed use in the lease. That circumstance was the decisive feature of this case.
An additional judgment in the case was that, particular to this case, the requirements that the property look like a residential property was, in large part, due to the conservation area in which the building was situated and as such it was deemed not to be a house!