This is another of the occasional cases on s.2(1) Leasehold Reform Act 1967 – the definition of a ‘house’ for the purposes of leasehold enfranchisement. Not strictly on point for Nearly Legal, but I enjoy them, so you get them…
Grosvenor Estates Ltd v Prospect Estates Ltd  EWCA Civ 1281 is a Court of Appeal case on the statutory right of the long lease tenant – Prospect Estates – to acquire the freehold of 132 Ebury Street, SW1. The property was built as a house for living in about 1850. The only major structural works since that date were the addition of a third and fourth floor. Since 1965 the top floor was used as residential accommodation, with the remaining 88.5% of the property used as office space, under short term sub-leases. The lease specified that the fourth floor was to be used as private residential accommodation in the occupation of a director, partner, officer, or senior employee of the company, organisation or firm occupying the rest of the premises. The remaining floors could only be used as business or professional offices.. However, any external indication that the building was commercially used was prohibited, including a requirement that windows should be furnished like a private dwelling.
The Judge in the court below viewed the property inside and out. The court found that, notwithstanding the terms of the lease, the property was a house, following what was taken as the test in Tandon v. Trustees of Spurgeon Homes  AC 755 (House of Lords) per Lord Roskill, that the circumstances would have to be such that that “nobody could reasonably call the building a house” for a judge to hold it wasn’t a house.
On appeal, the appellant accepted that there were insufficient works of adaptation to stop it being designed for living, but contended that it could not be a house ‘reasonably so called’. The appellant sought to distinguish Tandon – the judge had erred in finding that the unchanged original design of the building was the decisive factor. Little or no weight had been given to the fact that at the relevant time the ‘greater part of the building was not used and could not be lawfully used for residential purposes’.
The respondent relied on Lord Roskill in Tandon at pages 765E-F:
… (1) as long as a building of mixed use can reasonably be called a house, it is within the statutory meaning of “house” even though it may also reasonably be called something else; (2) it is a question of law whether it is reasonable to call a building a “house”; (3) if the building is designed or adapted for living in, by which, as is plain from section 1(1) of the Act of 1967, is meant designed or adapted for occupation as a residence, only exceptional circumstances, which I find it hard to envisage, would justify a judge in holding that it could not reasonably be called the house. They would have to be such that nobody could reasonably call the building a house.
A change of use to mixed residential and commercial was not an exceptional circumstance.
Held: (Mummery LJ) The history of Tandon through the Courts showed the difficulty of achieving the desired consistency of outcomes. While it was a strong thing to say that ‘nobody’ could reasonably call this building a house, the Judge in the Court below had applied Lord Roskill’s propositions without taking full account of all relevant circumstances. In particular, the Judge had failed to consider the “peculiar, even exceptional” circumstance of the the prescribed use in the lease. That circumstance was the decisive feature of this case.
Goldring LJ agreed.
In Lady Justice Smith’s additional judgment, the requirements that the property look like a residential property was, in large part, due to the conservation area in which the building was situated.
What puzzles me slightly, particularly given the stated aim of consistency, is the difference in approach to that of Boss Holdings Ltd v Grosvenor West End Properties Ltd  1 WLR 289 (which I briefly discussed here). Granted the issue is different – habitability rather than use – but the Boss approach to design and adaptation seems to be in accord with the first order decision in this case, as do the obiter remarks on the historic nature of design.
The lease issue puzzles me. Given that any requirement that the tenant should have occupied the premises as his residence was removed by the Commonhold and Leasehold Reform Act 2002, why a restriction in a lease on occupation as residence should affect whether the property can reasonably be called a house is not clear to me. After all, Boss decided that a property that was effectively physically unoccupiable as a residence remained a house (and that was with over half the property having been used as commercial property). Still, unless this case is appealed, there we are – the conditions of a lease can affect whether a property is reasonably called a house.