Supreme Court judgment pleases commercial landlords
A building used entirely for non-residential purposes cannot be a “house” for the purposes of the Leasehold Reform Act 1967, even if was originally designed to be one, the Supreme Court has unanimously held.
Six justices, including Lord Phillips, ruled in favour of the landlords in the conjoined appeals of Day v Hosebay; Howard de Walden Estates v Lexgorge [2012] UKSC 41. They held the determinative issue was established use rather than original design, appearance or alternative description in architectural histories.
Hosebay involved a former house that had been adapted for use as a self-catering hotel, while de Walden concerned a former house now used as offices.
The 1967 Act gives the tenant of a leasehold house under a long lease that he has owned for at least two years the right to acquire the freehold. Both cases turned on the definition of “house” in s 2(1) as “reasonably so called” and “designed or adapted for living in”.
Damian Greenish, chairman of Pemberton Greenish, who acted for the Day family, says: “This will be a very welcome judgment for landlords of commercial properties.
“Earlier judgments suggesting that commercial buildings can be enfranchised under the 1967 Act are criticised by the Supreme Court for an over-literal construction of the statute.”
Jeremy Hudson, partner at Speechly Bircham, who acted for de Walden, says: “Had the appeal failed, [my clients] were fearful that over time very many more of its freeholds could be lost through enfranchisement, threatening the very integrity of their estate. This was a concern evidently shared by the other major estate landlords in central London, as well as landowners further afield.
“However, it is disappointing that the Supreme Court has passed up the opportunity to lay down a definitive test…so that there will inevitably be borderline cases in future.”
