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The Supreme Court has ended years of legal uncertainty by ruling on what constitutes a house in the contest of leasehold enfranchisement.
The two joined appeals raised the question of whether a property used wholly for commercial purposes qualified as a ‘house’ under legislation governing the right to leasehold enfranchisement - the right of a lessee in certain circumstances to acquire the freehold of the building from the landlord.
The judicial panel of seven was unanimous in overturning a Court of Appeal (CoA) decision stating that the 2010 decision has unintended consequences.
“Lord Neuberger of Abbotsbury MR regretted this result,” Lord Carnwath said in the substantive ruling. “He saw it as the probably unintended consequence of amendments made by the Commonhold and Leasehold Reform Act 2002, removing the previous residence requirements.”
The ruling concluded: “A building wholly used for offices, whatever its original design or current appearance, is not a house reasonably so called. The fact that it was designed as a house, and is still described as a house for many purposes, including in architectural histories, is beside the point.”
The Howard de Walden Estates (HdeW) appeal was lead by Falcon Chanbers’ Jonathan Gaunt QC and Landmark Chambers’ Katharine Holland QC, instructed by Speechly Bircham partner Jeremy Hudson.
Instructed for the respondent in that appeal for Lexgorge was Falcon Chambers’ Anthony Radevsky, instructed by Wallace partner Simon Serota.
The joined appeal was led by Maitland Chambers’ Edwin Johnson QC, instructed by Pemberton Greenish partner Damien Greenish, for Day.
Responding to the joined appeal was Falcon Chambers’ Stephen Jourdan QC, instructed by Bircham Dyson Bell legal executive Bernard D’Monte, for Hosebay.
Hudson at Speechly Bircham said the ruling was of paramount importance.
“Had the appeal failed, HdeW were fearful that over time very many more of its freeholds would be lost through enfranchisement, threatening the very integrity of their estate,” he said. “This was a concern evidently shared by the other major estate landlords in central London as well as landowners further afield.
“However, it’s disappointing that the Supreme Court has passed up the opportunity to lay down a definitive test as to what is or is not a house within the scope of the 1967 act, so that there will inevitably be borderline cases troubling the courts in future years.”
The Day appeal related to three properties in Kensington that were originally built as houses but that at the relevant time had been converted into a self-catering hotel.
In both cases the County Court and the CoA had concluded that these were houses within the meaning of the 1967 act. The Supreme Court disagreed.
In its view, the primary meaning of ‘house’ is a single residence, adding that the act “is about houses as places to live in, not about houses as pieces of architecture, or features in a street scene, or names in an address book”. Therefore, in the court’s view none of the buildings involved in these two appeals could reasonably be called a house.