By J
04/07/2010

You know it when you see it

What is a house? Rather like the well-known elephant test, this point consistently comes before the higher courts – and many other great thinkers – and, in Day v Hosebay Ltd; Howard De Walden Estates Ltd v Lexgorge Ltd [2010] EWCA Civ 748, the Court of Appeal had another go.

The Leasehold Reform Act 1967 entitles leaseholders of a house to enfranchise their building. As originally enacted, there was a residence requirement but the Commonhold and Leasehold Reform Act 2002 did away with this, replacing it with a requirement that the lease has been owned by the tenant for at least two years.

In order to qualify for enfranchisement, the house has to come within the definition in s.2, 1967 Act and includes “any building designed or adapted for living in” that can “reasonably” be called a house. In Tanden v Trustees of Spurgeon Homes [1982] AC 755, it had been said that this was not an exacting test; unless no reasonable person could call the property a house, then it probably was; the key indicia were likely to be the internal and external appearance. In Boss Holdings Ltd v Grosvenor West End Properties Ltd [2008] 1 WLR 289 (discussed by us here), the original purpose of the design or adaptation was also stressed. Against that, in Prospect Estates Ltd v Grosvener Estates Ltd [2008] EWCA Civ 1281 (discussed by us here) focused on actual and permitted use (lease only allowed c.11.5% of the property to be used for residential purposes). As we noted when Prospect Estates was handed down, it didn’t fit easily with Tanden and Boss Holdings.

Back to the facts: in Hosebay, the respondent was the leaseholder of three properties each of which had originally been designed as houses, but which had been adapted so as to provide self-contained accommodation for, inter alia, tourists and visitors to London (suitable for students on 3 year degree courses, according to one Lord Justice. In Lexgorge, the property had originally been built as a house but now at least half was used as office space. In each case, the county court judge held that the properties were houses within the meaning of s.2.

The appeals were dismissed. In both cases, the properties had clearly originally been designed for living in and had not subsequently been adapted away from that purpose. The current use – or intended use – was less important than the objective assessment of the original design or adaptations in question. It was, however, possible to adapt away from being a house, a point left open by Boss. The more subjective approach taken in Prospect Estates (i.e. looking at what the lease provides for and what is currently happening) was confined to a very narrow category of cases where the lease prohibited – in whole or overwhelming majority – the use of the property for residential purposes and where the actual use accorded with that prohibition.

The Court had no real enthusiasm for this result, which meant that two corporate entities could enfranchise properties that were largely used for commercial purposes. The 1967 Act had been about protecting and empowering residential occupiers and tenants, not enabling commercial parties to acquire property from each other. Parliament almost certainly did not intend such a result but, unless the 1967 Act is further amended, such a result is possible.

J is a barrister. He considers housing law to be the single greatest kind of law known to humankind and finds it very odd that so few people share this view.

3 Comments

  1. chief

    Now the Supreme Court is going to have a bash at it as well – Lords Walker, Mance & Collins gave permission last week.

    Reply
  2. chief

    And they will now hear the appeal on 16th-18th July. Lords Phillips, Walker, Mance, Clarke, Wilson, Sumption & Carnwath.

    Reply
    • J

      A 7 person constitution? So, presumably, they’re going to consider overruling Tandon?

Leave a Reply (We can't offer advice on individual issues)

This site uses Akismet to reduce spam. Learn how your comment data is processed.