News story

Court of Appeal rules on leasehold houses

The Court of Appeal has ruled in two cases that a “house” under Leasehold Reform Act 1967 (1967 Act) can extend to “buildings exclusively used for business purposes”. Lord Neuberger MR, who spoke at LEASE’s recent annual conference, dismissed the landlords’ appeals against the two decisions, “with no particular enthusiasm” and said that the enfranchisement legislation “can extend to buildings exclusively used for business purposes”.

In the first case, Hosebay Ltd v Day, three London properties in a terrace were concerned, all originally constructed and first occupied as houses. Leases to two of the houses required that they should be used only “as 16 residential flats” and that the external appearance of the premises be that of “a private dwelling house”. The lease of the third property limited its use to a single family residence or a high–class furnished property for up to 20 occupiers. When the claim was made under the 1967 Act it was challenged but the judge held that each property was a house, having found that the properties were being used as short–term accommodation and that each property had been adapted to provide individual rooms with self–catering facilities for letting purposes.

The second case, Lexgorge Ltd v Howard De Walden Estates Ltd, concerned a property in prime central London, which was built as a house, in a terrace of large houses. The lease described the property as a “messuage or residential or professional premises” and its use was limited to “self–contained flats or maisonettes”. Lexgorge waited more than 25 years to serve notice on the landlord to acquire the freehold. That application too was resisted, but a judge found that notwithstanding that the entire property was being used as offices at the date of the notice and the fact that, under the lease, around half of the internal area of the property could not be used other than as offices it did not prevent the property being “a house… reasonably so called”.

(News story added: 7 July 2010)