The Leasehold Reform Act 1967 enables long leaseholders to buy the freeholds of premises designed or adapted for living in, which can reasonably be called a “house”. The use of part of a building for business purposes does not remove it from the legislation and, in Tandon v Trustees of Spurgeons Homes [1982] 2 EGLR 73, a majority of the House of Lords decided that a shop with a flat above, which was constructed as a mixed unit and which formed part of a parade of similar buildings, was “a house reasonably so called”.
However, the Supreme Court decision in Hosebay Ltd v Day [2012] UKSC 41; [2012] 3 EGLR 31, which concerned premises that were wholly non-residential, appears to have wrought changes in the approach to mixed-use premises – even though the Supreme Court did not disapprove of Tandon. We saw early evidence of this in Henley v Cohen [2013] EWCA Civ 480; [2013] PLSCS 91 and have now seen it again in Jewelcraft Ltd v Pressland [2014] PLSCS 212.
The case concerned a building that formed part of a parade of shops with living accommodation above. Access to the flat above the shop was obtained via an external open staircase in the yard at the rear of the property, which, in turn, was accessible through a wooden gate leading off an alleyway behind the parade. The building had a long history of residential user in accordance with the provisions of the lease – and the tenant claimed that the case was on all fours with Tandon.
The tenant argued that it did not matter that the shop and flat were self–contained units and, since the property as a whole was designed for living in, that it would be reasonable to call the building a “house”. The county court judge considered the authorities carefully. He accepted that Tandon remains good law, but ruled that the decision did not mean that every building consisting of a shop beneath and flat above is “a house reasonably so called”.
The judge drew on the decisions in Henley and Magnohard Ltd v Earl Cadogan [2012] EWCA Civ 594; [2012] 2 EGLR 74 and dismissed the tenant’s claim. He took the view that the question that he had to address was, not whether it was possible, but whether it was reasonable to call the building a “house”. He took account of the history, physical appearance and layout of the property, of the terms of the lease, and, importantly, of the fact that the building was not a physically mixed unit because the retail and residential accommodation had been separate for the last 40 years.
In addition, the building did not look like a house. It was constructed as, and looked like, part of a parade of shops. It was not a house within a terrace of houses and the overwhelming character of the building, and the parade, was commercial. Consequently, it would not be reasonable to call the building a “house”.
The judicial approach to the question of whether property in mixed-use can reasonably be described as a “house” would appear to have become much tougher. However, it will take time – and further test cases – to establish the extent to which the approach has changed.
Allyson Colby is a property law consultant
