Summary

The right to enfranchisement under the Leasehold Reform Act 1967 extended to buildings that were exclusively used for business purposes, provided the buildings amounted to a "house" within the meaning of s.2(1) of the Act.

Facts

The appellant landlords (L1 and L2) appealed against the courts' interpretation of "house" under the Leasehold Reform Act 1967 s.2(1) in joined proceedings against the respondent tenants (T1 and T2). T1 and T2 were companies. T1 had acquired long leases on three properties in a terrace of buildings that had been fully adapted to provide several individual rooms for letting, and were used as short-term accommodation for tourists and other visitors. The premises were originally constructed and first occupied as large houses, and were described as a messuage or dwelling house in the leases. T2 had also acquired a long lease on a property that was designed, built and initially used as a town house residence for a single family. The property maintained its physical appearance externally, but in accordance with the lease that the upper floors were restricted to residential use and the lower floors to office use internal works had been done so that the lower floors could be used as offices. The whole of the property was however being used as offices at the relevant date. T1 and T2's notices under s.8 to acquire the freeholds of the properties were resisted by L1 and L2 on the basis that the premises were not houses under s.2(1) as they could not be described as a "house reasonably so called". T1's notice was also resisted on the basis that the premises were not a house as they were not "designed or adapted for living in". The courts held that the premises were houses under s.2(1).

Held

(1) It was necessary to look at the most recent works of adaptation that altered the actual building and assess objectively whether they resulted in the property being adapted for living in, and the subjective intention of the adaptation was rarely relevant, Boss Holdings Ltd v Grosvenor West End Properties Ltd (2008) UKHL 5, (2008) 1 WLR 289 followed. With the exception of one or two rooms, each room in T1's properties was a self-contained unit of accommodation that was entirely appropriate to be let out on a long term basis. Had they been so let out, all the rooms, and therefore the three buildings, would have been used for living in. Even if the use at the time was not for living in, it did not mean that viewed objectively the three properties were not so adapted. In addition, to the extent that the subjective intention was relevant, it was likely that the works of adaptation were carried out before the leases were granted, which stipulated that the premises were to be used as a family house or residential apartments. It followed that T1's premises had been designed or adapted for living in under s.2(1). (2) Each of T1's properties were designed and constructed for use as a residence in single family occupation, with the external appearance of a town house and with internal conversions so that almost every room could be used as a self-contained unit; even if they could be called something else as well it was clear that they could reasonably be called a house, Lake v Bennett (1970) 1 QB 663 CA (Civ Div) and Tandon v Trustees of Spurgeons Homes (1982) AC 755 HL followed. Where premises had been designed or adapted for living in, the circumstances would have to be such that nobody could reasonably call the building a house for it to be excluded from the definition under s.2(1), Tandon followed. Even assuming that the actual use of the premises was a relevant factor, to hold that they could not reasonably be called a house would involve concluding that the actual user, even where it involved people occupying virtually all the rooms albeit on a short term basis, trumped all the other factors. (3) The fact that T2's property was used wholly for office purposes did not mean that it was not a "house reasonably so called". The lease had provided for residential use on the upper floors, so it was not a case where both the permitted use and actual use of the property excluded residential use or limited it to a very small proportion of the building, Grosvenor Estates Ltd v Prospect Estates Ltd (2008) EWCA Civ 1281, (2009) 1 WLR 1313 distinguished. Had the upper floors of the property been empty there was little doubt that it could reasonably have been called a house, bearing in mind its external appearance, its internal appearance on the upper floors, the description of the property in the lease as residential and the terms of the lease restricting the upper floors to residential use. (4) Accordingly, both sets of premises were houses under s.2(1), and T1 and T2 had the right to acquire the relevant freeholds. (5) (Obiter) It followed that the right to enfranchisement under the 1967 Act extended to buildings exclusively used for business purposes.

Appeals dismissed