Leasehold Reform Act 1967 – Enfranchisement of house – Appellants owning terraced properties originally built as single residences – Some properties furnished and let as bedsits for short-term holiday lets – One property used entirely as office accommodation in breach of user covenants in lease – Whether properties qualifying as “houses” for purposes of section 2(1) of 1967 Act – Whether respondent leaseholders entitled to enfranchise – Appeals allowed
In each of the two joined appeals, the respondents, as the long leaseholders of certain properties, had applied to acquire the freehold of those properties pursuant to the leasehold enfranchisement provisions of the Leasehold Reform Act 1967. An issue arose as to whether each property constituted a “house” qualifying for enfranchisement within the definition in section 2(1) of the 1967 Act. In the county court, the properties were found to qualify for enfranchisement. The Court of Appeal upheld that view, finding that each of the properties fulfilled both limbs of the section 2(1) definition since it had originally been designed and subsequently adapted for living in and could also reasonably be called a house: see [2010] EWCA Civ 748; [2010] 3 EGLR 66; [2010] 38 EG 106. The appellants appealed.
Both appeals concerned large terraced properties that had originally been constructed and occupied as houses. The first appeal related to three properties in South Kensington, London SW7. The relevant leases specified that two of the properties were to be used as 16 high-class self-contained private residential flatlets, while the third was to be used as a single family residence or high-class furnished property for up to 20 occupiers. In fact, the individual rooms in all three properties had been converted into self-catering units, each with bathroom and cooking facilities, and were let as short-term accommodation for tourists and other visitors to London.
The second appeal related to a property in Marylebone, London W1; the lease described the demised premises as a “messuage or residential or professional premises” and stipulated use as professional offices on the lower two floors and self-contained flats or maisonettes on the upper two, with associated storage in the basement. In fact, all four upper floors had long been used as professional offices.
Held: The appeals were allowed.
(1) The 1967 Act was not intended to confer statutory rights on lessees of buildings that were used for purely non-residential purposes. The Act was concerned with houses as places to live in, not merely about houses as pieces of architecture, or features in a street scene, or names in an address book. Both parts of the section 2(1) definition of a house had to be read in that context.
It was not appropriate to take a literalist approach to the section 2(1) definition, treating the words “designed” and “adapted” as alternative qualifying requirements. The fact that a building had originally been designed for living in was not sufficient to bring it within the first part of the definition regardless of any subsequent adaptation to other uses: Boss Holdings Ltd v Grosvenor West End Properties [2008] UKHL 5; [2008] 1 WLR 289; [2008] 1 EGLR 51; [2008] 15 EG 174 considered. Instead, the first part of the definition should be regarded as a simple way of defining the present identity or function of a building as a house, by reference to its current physical character, regardless of whether that character was derived from its original design or from subsequent adaptation: Ashbridge Investments Ltd v Minister of Housing and Local Government [1965] 1 WLR 1320 applied. The word “adapted” in that context meant no more than “made suitable” and, although it applied to the building itself rather than its contents, it did not imply any particular degree of structural change. Where a building was in active and settled use for a particular purpose, the likelihood was that it had undergone at least some physical adaptation to make it suitable for that purpose. In most cases, that purpose could be taken as the use for which the building was currently “adapted” and in most case it would be unnecessary to look further.
The second part of the definition, asking whether the property was a house “reasonably so called”, tied the definition to the primary meaning of “house” as a single residence, as opposed, for example, to a hostel or block of flats.
(2) Applying the foregoing principles, none of the appeal properties qualified for enfranchisement. As to the first appeal, a property that was wholly used as a self-catering hotel was not a house “reasonably so called” within the meaning of the 1967 Act. Determinative weight should not be given to the external appearance of the property as a townhouse. The fact that the buildings looked like houses, and might be referred to as houses for some purposes, was insufficient to displace the fact that their use was entirely commercial. As to the second appeal, a building that was wholly used for offices, whatever its original design or current appearance, was not a house reasonably so called. The fact that it was designed as a house, and was still described as a house for many purposes, including in architectural histories, was beside the point: Lake v Bennett [1970] 1 QB 663; (1969) 213 EG 633, Prospect Estates Ltd v Grosvenor Estate Belgravia [2008] EWCA Civ 1281; [2009] 1 WLR 1313; [2009] 1 EGLR 47; [2009] 02 EG 86 and Tandon v Trustees of Spurgeons Homes [1982] AC 755; [1982] 2 EGLR 73; (1982) 263 EG 349 considered.
Edwin Johnson QC and Oliver Phillips (instructed by Pemberton Greenish LLP) appeared for the appellants in the first appeal; Stephen Jourdan QC and Anthony Radevsky (instructed by Bircham Dyson Bell LLP) appeared for the respondents in the first appeal; Jonathan Gaunt QC and Katharine Holland QC (instructed by Speechly Bircham LLP) appeared for the appellant in the second appeal; Anthony Radevsky and Mark Sefton (instructed by Wallace LLP) appeared for the respondent in the second appeal.
