James Driscoll once again considers the question “what is a house?” – this time when buildings overlap
Key points
- If a material part of a house lies above or below other premises, it can defeat enfranchisement under section 2(2) of the Leasehold Reform Act 1967
- The extent to which a flank wall constituted an overhang or underhang was considered de minimis
- Even if it was not, a party wall could not be considered “material” for the purposes of section 2(2)
Over the years, this column has often commented on the plethora of cases on whether a particular building is a “house” or not. It is an important issue in leasehold enfranchisement, as there are often disputes over whether a building qualifies as a house. Last year there was the decision in Jewelcraft Ltd v Pressland [2015] EWCA Civ 1111; [2015] PLSCS 300 (see Making the house call, 5 December 2015, p81) and later this year an application for permission to appeal in that case will be heard by the Supreme Court.
Underhanging and overhanging houses
To complicate matters further, a building might be a “house” yet still not qualify where part of the building either lies under or overhangs a neighbouring building. This is because, under section 2(2) of the Leasehold Reform Act 1967, the enfranchisement provisions “…do not apply to a house which is not structurally detached and of which a material part lies above or below a part of the structure not comprised in the house”.
What is “material”?
In the leading case of Malekshad v Howard de Walden Estates Ltd [2002] UKHL 49; [2003] 1 EGLR 151, the House of Lords decided that where some 2% of the overall floor area lay below an adjoining property this was not a “material” part of that property and so the property qualified for enfranchisement. In an earlier decision the Lords decided that an overhang of 10% was material, so that the property did not so qualify (Parsons v Viscount Gage (Trustees of Henry Smith’s Charity) [1974] 1 WLR 435).
The new case
The latest decision on section 2(2) is West End Investments (Cowell Group) Ltd v Birchlea Ltd [2015] EWHC 3381 (Ch); [2015] PLSCS 336. The court dealt with an appeal by the landlord against an order made in the county court that the claimant leaseholder is entitled to enfranchise.
The claimant had a lease of a mews house which is part of a terrace of houses. The parties agreed on the basic facts of the relevant house and the adjoining properties. The trial judge carried out an inspection of the properties. During the hearing photographs of the building and a drawing were produced and appended to the decision.
The house has two storeys and is divided from the house next door by a flank wall which is much taller than the mews house. This flank wall extends vertically beyond the roof of the mews house to the full height of the neighbouring house. Under the leases of the two properties, one half of the party wall severed vertically was owned. This external flank wall is a single vertical wall. In other words, part of the flank wall is part of the mews house and also part of the adjoining property. The parties also agreed that the flank wall was a party wall up to the point where it extends beyond the roof of the mews house, but not beyond that point.
According to the landlord, this excluded the mews house from enfranchisement under section 2(2) of the Act. The leaseholder argued that, as the two houses were vertically divided, the division of the flank wall between the two properties did not amount to an overhang or an “underhang”.
In county court proceedings, Judge Dight decided that the mews house was enfranchisable. As the division between the two properties was vertical, any alleged overhang or underhang was “de minimis”. However, he also concluded that if he was wrong on this point, that the part of the flank wall which lies within the mews house was a material part and the house would not be enfranchiseble. A declaration that the leaseholder was entitled to enfranchise was made.
The appeal decision
Dismissing the landlord’s appeal, Carr J accepted most of Judge Dight’s reasoning: there was a vertical division of the two buildings; even if there was a degree of overhang or underhang it was de minimis; and, as a matter of policy (that is to say the policy under the Act that house leaseholders should have the right to enfranchise wherever possible) the existence of a party wall should not exclude a house from enfranchisement.
He disagreed, however, with Judge Dight’s conclusion that the wall could have amounted to a material part of the building. Carr J gained assistance from Hague on Leasehold Enfranchisement, which states, following Malekshed and Parsons, that only living rooms, bedrooms, kitchens or bathrooms (or parts of such rooms) would amount to a “material part” for these purposes. The authors added that, as a general rule, eaves, drainpipes, cupboards, box-rooms, chimney breasts and the like would not be material.
Carr J said that, in this case, a vertical division of a single party wall which does not include any of the floor area is entirely different from, for example, a substantial part of a living room or a bedroom.
He also noted that, where there is an underhang or overhang which is immaterial, the landlord is not without a remedy as under section 5(5) of the Act the landlord may give notice to exclude parts from the acquisition.
There may be many cases of terraced houses where this decision may be relevant. Provided the houses in the terrace are vertically divided, each of them could be enfranchised if owned leasehold, subject to section 2(2).
James Driscoll is a solicitor, a writer and an accredited mediator
