Hemphurst Ltd v Durrels House Ltd [2011] UKUT 6 (LC) is, I suspect, going to go on appeal to the Court of Appeal. Certainly, if you practice in the field of leasehold enfranchisement, it’s one you’ll want to know about as it’s pretty important.

In general terms, qualifying tenants of flats have a right to collectively enfranchise the freehold of the building containing their flats (Leasehold Reform, Housing and Urban Development Act 1993). Where there is an intermediate leasehold interest of any flat, the qualifying tenants are obliged to purchase that interest (s.2(1)(a), 1993 Act). Where there is a separate lease of any common parts (or appurtenant property) then, in specified circumstances, the qualifying tenants may (i.e. it is a discretion) acquire that interest. The Act does not say if they have to acquire all the property under the leasehold interest or if they can pick and chose which parts they want.

In the present case, the freeholder had granted a lease to a third party of the roofspace and airspace, with a view to that third party building a flat or flats. The tenants then sought to exercise the right to collective enfranchisement and sought to purchase only part of the property dealt with by the aforementioned lease (basically, the flat that was going to be build didn’t cover all the roof space; the tenants wanted to acquire the part that wouldn’t be built on). The freeholder said this wasn’t possible: the leaseholders had to purchase all the property under the leasehold interest or none of it.

The LVT found for the freeholder, but the Upper Tribunal allowed an appeal by the nominee purchaser. The language of the 1993 Act was unclear on this point and didn’t point to any particular answer. The policy of the 1993 Act was, however, to favour tenants. That being so, there was no reason why they could not acquire only that part of the leasehold interest that they wished.

Comment

Interesting. That conclusion doesn’t emerge clearly from the wording of the 1993 Act. I have some sympathy with a point made by the freeholder about whether it was desirable to let leaseholder pick and chose what parts to acquire, and the danger of establishing a “patchwork quilt” of title in a property. The answer, said the UT, was for the landlord to serve a counternotice under s.21(4), 1993 Act, requiring the tenants to purchase the additional property.

Ok – I see that, but what about where (as is quite common), the landlord either fails to serve a counternotice or serves one that it later found to be invalid?