Supreme Court rules in favour of landlords

7 October, 2012
by: Cripps Pemberton Greenish

The Leasehold Reform Act 1967 does not apply to a building used wholly for non-residential purposes, even if that building had been originally designed as a house. The Supreme Court has unanimously so held in allowing the appeals of the landlords in the conjoined appeals of Day v Hosebay and Howard de Walden v Lexgorge. Neither the buildings in Hosebay (which were adapted for use as a “self-catering hotel”) nor the building in Lexgorge (which had been used for many years as offices) were a “house reasonably so called”. The determinative issue was not what the buildings had originally been designed for nor what they looked like nor how they might otherwise be described but about established use. The 1967 Act is concerned with houses and not commercial buildings.

Damian Greenish, Chairman of Pemberton Greenish LLP, who acted for the Day family, said:

“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. This judgment follows the recent decision of the Court of Appeal in Magnohard Ltd v Earl Cadogan & another [2012] EWCA Civ 594 that a purpose-built block of flats also is not a house for the purpose of the 1967 Act.”

Background: The Leasehold Reform Act 1967 gives to the tenant of a leasehold house which he holds under a long lease (a lease for an original term in excess of 21 years) that he has owned for a period of at least two years, the right to acquire the freehold interest in that house from his landlord. These cases were concerned with the meaning of two elements of the definition of “house” in section 2(1) of the 1967 Act. The questions were whether the buildings in these cases were: “designed or adapted for living in” and “a house reasonably so called”.