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So what is a “house”?

The Supreme Court consisting of a panel of seven Justices handed down its Judgement in the cases of Day v. Hosebay and Howard de Walden Estates Limited v. Lexgorge Limited [2012] UKSC 41 on 10th October 2012.

This was an appeal to determine what is a “house” under the Leasehold Reform Act 1967 with regards to the enfranchisement of houses. The Act is in place to allow the owners of leasehold houses to enfranchise and thereby purchase their freeholds. Issues arose as a result of amendments made under the Commonhold and Leasehold Reform Act 2002 which removed the previous residence requirement. As a result of these amendments companies which owned leaseholds and those sub-letting or owning as a second home were able to exercise rights under the legislation.

In the Judgement (given by Lord Carnwath and agreed by all six other Justices) consideration was given to the intentions of Parliament in making such amendments and highlighting that the purpose was to address perceived flaws in the “residential leasehold system” and not in the wider sense.

In all of the lower courts it was found that the buildings in question were a “house” and so could enfranchise.

The property in Hosebay at the date of service of the relevant notice was being used as a self-catering hotel. In Lexgorge they were being used as offices. The Court said that this was not “a house reasonably so called”. Simply because the properties looked like a house and might sometimes be referred to as a house did not displace the fact that their use was entirely commercial.

What seems clear is that the Supreme Court has taken account of the intention of Parliament. The legislation should apply to properties genuinely being used as residential accommodation and simply because of the amendments made by the 2002 Act this should not be extended to allow buildings which may originally have been “houses” but are now used for commercial purposes being able to enfranchise. Undoubtedly the great estates in London and other property companies will be breathing a sigh of relief.

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