Leasehold Houses – Buying the freehold – Qualification and procedure
For buying the freehold of leasehold houses.
By Nicholas Kissen, Senior Legal Adviser
By a judgment handed down on 4th May 2012 the Court of Appeal decided that a purpose-built block of flats in Chelsea is not a “house” for the purposes of buying the freehold.
Under the Leasehold Reform Act 1967 a leasehold owner of a house can force their immediate landlord to sell the freehold at a price to be decided by the Leasehold Valuation Tribunal if not agreed so long as the house has been registered in their name at HM Land Registry for at least two years.
Magnohard was the leaseholder of the building constructed in 1888. The lease was granted in 1986 and at the time the notice to buy the freehold was served (September 2010) it comprised eight flats and three small shops.
To qualify as a house for the purposes of buying the freehold Section 2(1) of the 1967 Act states it must be a building designed or adapted for living in and reasonably so-called.
The freeholder contested the claim arguing that the building was not a house reasonably so-called.
Her Honour Judge Hazel Marshall QC at the Central London county court declared that the property was a block of flats and could not reasonably be called a house “let alone in ordinary parlance”.
The leaseholder took the issue to the Court of Appeal and did not succeed.
The Court of Appeal concluded that the words “reasonably so-called” were intended to be words of limitation and the mere fact that a building might be called something other than a house was not enough to trigger that exclusion. So long as it could reasonably be called a house the building was within the definition even though it might reasonably be called something else.
The significant question was not whether it was possible to call a building a house but whether it was reasonable to do so.
There was a clear consensus of judicial opinion that a purpose built block of flats could not reasonably be called a house.
In the words of the Master of the Rolls “a building constructed, laid out and used as a block of substantial self-contained flats throughout its 120 years of existence cannot reasonably be called a house – at least in the absence of very unusual factors”.
In July 2012 the Supreme Court is due to consider the issue of what qualifies as a house in the joint appeals of “Hosebay v Day” and “Lexgorge v Howard de Walden”.