Has the latest decision on this vexed issue clarified the law?
Flats over shops are to be found all over the country. If the building is held on a long lease, it may be possible to enfranchise under the Leasehold Reform Act 1967 (“the Act”). The starting point is the question: is the building a “house” – a word defined as “any building designed or adapted for living in and reasonably so called, notwithstanding that the building is not structurally detached, or was not solely designed or adapted for living in” (section 2(1))? A building in mixed-use can be a house.
In Jewelcraft Ltd v Pressland [2015] EWCA Civ 1111, the Court of Appeal has allowed an appeal against a decision that such a building is not a “house” in a claim made under the Act. It concerns premises consisting of a ground-floor purpose-built shop with residential accommodation on the floor above it. It is part of a parade of similar shops. It means that the appellant leaseholder is entitled to acquire the freehold of the whole of the building on payment of a premium. It carries obvious implications for anyone owning a long lease of a building which consists of a flat over a house.
Disputes over whether a building is a “house” or not have reached the higher courts on countless occasions and there is a well-developed series of decisions of the House of Lords, the Supreme Court and the Court of Appeal, though they are not all easy to reconcile. The decision in Jewelcraft comes not long after the decision of the Supreme Court in Hosebay Ltd v Day and Lexgorge v Howard de Walden Estate [2012] 1 WLR 2884, as well as the decision of the Court of Appeal in Henley v Cohen [2013] L&TR 28. In Hosebay it was decided that buildings which were constructed or look like a house cannot reasonably be called a house where the actual use is commercial not residential. In Henley it was decided that a building where the upper level was converted into residential accommodation was not a house at the date of the claim. In Hosebay the Court also considered the previous ruling of the House of Lords in Tandon v Trustees of Spurgeons Homes [1982] AC 755 where the Lords (by a majority) decided that premises consisting of a flat over a shop was a house. As interpreted in Hosebay it is the use to which the building is put that is crucial.
In Jewelcraft the property was originally a shop which was not self-contained and had internal access to some residential accommodation. In the 1970s it was altered, with the result that the residential part became self-contained. Applying Tandon, and allowing the appeal, the Court decided that shops with accommodation above are in law reasonably described as a house. The Court considered that Henley was exceptional and doubted if it was correctly decided. We may well see other decisions on this difficult issue.
James Driscoll is a solicitor and a writer
