When a House ain’t a Home – Enfranchisement Ruling

The Supreme Court has today ruled that occupiers of buildings that were once houses but have since been converted to other uses don’t have the right to buy the freehold under enfranchisement rules.

The ruling will come as a relief for London's numerous landed estates.

Despite the word “house” being one of the 200 most frequently used words in the English language and one of the 20 most frequently used nouns, the Supreme Court has had to clarify its meaning when it comes to enfranchisement claims (basically a tenant’s statutory right in some circumstances to buy the freehold).

CMS Cameron McKenna report how an unintended consequence of the abolition of a residence test for enfranchisement claims in 2002 led to a spate of decisions in the appellate courts on the question of what constitutes a house for the purposes of the Leasehold Reform Act 1967 – the relevant enfranchisement legislation.

In the cases Hosebay V Day and Lexgorge V Howard de Walden, the Supreme Court today unanimously ruled that although two properties were originally designed as homes, neither was now a "house" so could not be enfranchised.

The properties are now used respectively as an office and a self-catering hotel.

The fact that the buildings might look like houses and might be referred to as houses for some purposes wasn’t sufficient to displace the fact that their use was entirely commercial. 

For a more detailed report, here's the Solicitors Journal.

CoStar report one of London's largest landlords, Grosvenor, commenting on the cases:

“We welcome the Supreme Court’s decision and will be studying the detailed judgement. It is clear that it was never Parliament’s intention to extend enfranchisement rights to commercial or business tenants.”

The question of when is a house not a house might not be finally put to rest though.

CMS comment:

“While landlords of buildings originally constructed as houses but now solely in commercial use may breathe a sigh of relief it is a little disappointing that the Supreme Court has not taken the opportunity to provide a more comprehensive framework for deciding what does constitute a house for the purposes of the 1967 Act. Accordingly this is unlikely to be the last word on the subject.”

Update 17/10/12

And now the dust has started to settle on those cases , here too is an interesting reflection from Mischon de Reya:
 
"However, the judgment is not as clear-cut as some commentators have been saying. The Act indicates that partial business use will not rule out enfranchisement, and the case does not discuss this point. It also does not address the situation where the buildings are unused at the date of the claim notice. Therefore a number of important issues surrounding enfranchisement may still be open to interpretation."

 
Photo by See-Ming Lee via flickr