The Leasehold Reform Act 1967 gives tenants the right to buy the freehold of their properties. This right exists only if the premises can be described as a “house”, but in recent years the courts have construed this expression very widely. The House of Lords has followed suit in Boss Holdings Ltd v Grosvenor West End Properties [2008] UKHL 5; [2008] PLSCS 5 overruling a Court of Appeal decision that interpreted the expression more narrowly.
The Court of Appeal had held that the test to be applied, when deciding whether or not premises satisfy the requirement that they must be a “house”, is whether those premises, viewed at that moment, were “designed” or “adapted” to be lived in. Applying this test, the court held that the premises in dispute were so dilapidated that they could not be described as having been designed or adapted for any use. Consequently, the tenant had no right to enfranchise under the 1967 Act.
The Leasehold Reform Act 1967 gives tenants the right to buy the freehold of their properties. This right exists only if the premises can be described as a “house”, but in recent years the courts have construed this expression very widely. The House of Lords has followed suit in Boss Holdings Ltd v Grosvenor West End Properties [2008] UKHL 5; [2008] PLSCS 5 overruling a Court of Appeal decision that interpreted the expression more narrowly.
The Court of Appeal had held that the test to be applied, when deciding whether or not premises satisfy the requirement that they must be a “house”, is whether those premises, viewed at that moment, were “designed” or “adapted” to be lived in. Applying this test, the court held that the premises in dispute were so dilapidated that they could not be described as having been designed or adapted for any use. Consequently, the tenant had no right to enfranchise under the 1967 Act.
The House of Lords disagreed. It ruled that premises that were designed for being lived in when built, and which remained substantially so designed, constituted a “house” for the purposes of the 1967 Act, even though they were incapable of being occupied because of their internal state. Their lordships found it difficult to see what policy considerations would have driven a requirement that a property must be fit to live in before a tenant could acquire the freehold. The issue of whether a property is fit for immediate residential occupation could easily lead to arguments and uncertainty; it would be debatable whether a property qualified. No such difficulties would arise if the legislation were given its natural meaning.
Their lordships agreed that, as a matter of ordinary English, the statutory provision that premises must be “designed or adapted for living in”, requires the courts first to consider the premises as they were initially built: for what purpose were they designed? The courts should then ask whether the premises had been adapted for another purpose and, if so, for what. The word “was” governs “designed”, and the word “is” governs “adapted”.
The House of Lords confirmed that a property need not be “solely” adapted for living in to be a “house”; it was the original design of the property that mattered. It also indicated that a property that had been designed or adapted for living in but that had subsequently been adapted for another use might still constitute a “house”, because “designed” and “adapted” were alternative qualifying requirements. Their lordships accepted that this might seem surprising and that it was arguable that the courts ought to imply a qualification barring claims from tenants whose premises had been, and still were, adapted for another purpose. However, it said that it was not easy to imply additional provisions into statutes.
It was unnecessary to decide this point to dispose of these proceedings, but it is only a matter of time before a tenant seeks to enfranchise premises that used to be a house but were converted for commercial use.
Allyson Colby is a property law consultant
