In its recent decision in the joined cases of Hosebay and Lexgorge, has the Supreme Court finally clarified what a house is?[i]
The Leasehold Reform Act 1967 gives tenants of houses the right to buy the freehold from their landlords in certain circumstances. The definition of “house” under the 1967 Act includes “any building designed or adapted for living in and reasonably so called”, even if the building is “not structurally detached, or was or is not solely designed or adapted for living in”.
Historically, the courts have taken a liberal approach to this definition, and landlords have always felt that the legislation was unfairly biased towards tenants. Given, however, the uncertainty that surrounds the 1967 Act’s definition of “house”, landlords have continued to look for ways to contest the validity of a tenant’s claim. Further, the Commonhold and Leasehold Reform Act 2002 has created further uncertainty by removing the requirement for tenants to occupy the house before they qualify for the right to buy the freehold. For some, that has opened the floodgates for further claims.
Not surprisingly therefore, the question of what in fact amounts to a house has been contested over the last few decades. One of the leading House of Lords decisions was the case of Tandon v Trustees of Spurgeon Homes [ii]. The property in that case consisted of commercial premises at ground-floor level with flats above. In common-sense terms, the building was clearly not a house. The court, however, decided that the building was a house for the purposes of the 1967 Act. In giving judgment, Lord Roskill commented that only in exceptional circumstances would a building which passed the design test and was a house reasonably so called not fall within the definition of “house” under the 1967 Act.
The Hosebay case concerned three separate properties, all of which were originally constructed as houses. When the tenant made its claim for enfranchisement, the properties had been separated into numerous flats on short-term lets with a resident caretaker and a reception area. Lexgorge, on the other hand, concerned a building that was originally constructed as a house and subsequently used for commercial purposes.
In both cases the county courts decided that the properties were houses under the 1967 Act. The Court of Appeal upheld the decisions. The landlords appealed and, in a unanimous decision, the Supreme Court denied the tenants the right to acquire the freehold. The questions to be considered were, first, whether a property used wholly for commercial purposes could qualify as a “house” under the 1967 Act and, secondly, whether the fact that a building was originally designed for “living in” (even if subsequently used for commercial purposes) was sufficient to bring it within the definition.
In the Hosebay case the judge described the premises as a “self-catering hotel” and concluded that a building used as a “self-catering hotel” is not “a house reasonably so called” as defined within the Act. A similar judgment was given on appeal in Lexgorge, in which the court ruled that a building used for offices, whatever its original design or current appearance, is not a “house reasonably so called”. The mere fact that the building might look like a house and the fact that it was originally designed as a house were not sufficient to bring the building within the scope of the definition.
While the Hosebay and Lexgorge cases seem, to some extent, to have turned the tables in favour of landlords, the Supreme Court has not clarified the position once and for all. No doubt the subject will continue to be a topic of much debate.