When is a house not a house?

The answer appears to be when it is on the Grosvenor Estate, used 88.5% as offices and has a lease clause that restricts the property to such use under the terms of the lease.

The latest case on what constitutes a house for the purposes of enfranchisement under the Leasehold Reform Act 1967 takes the question of ‘what is a house?’ a step further although, as the tenant has abandoned their proposed appeal to the House of Lords, we will not be treated to further judicial consideration of the question in this case.

The case in question is Grosvenor Estates Limited v Prospect Estates Limited [2008] EWCA Civ 1281.

In Prospect, the facts were that the building constructed in or around 1850 as a house. Since construction two floors had been added and at the date of the notice of claim in early 2007, the property was held under the terms of a lease for use as offices, with only the topmost floor being set aside for residential purposes.

The terms of the lease stated that the top floor was to be used for residential purposes only by a director, partner, officer or senior employee of the company person or firm in occupation of the remainder of the building.

On the facts 88.5% of the building was used for non-residential purposes under the terms of the lease. The building had been used in this way for the last 50 years.

At first instance the court had determined that the building was a house within the meaning of the 1967 Act. The landlord appealed.

The Court of Appeal reviewed the relevant authorities on this point and considered the applicable tests to be as follows:-

1. If a mixed-use building can reasonably be called a house, it remains a house within the meaning of the 1967 Act even if it could reasonably be called something else.

2. Whether it is reasonable to call something a house is a question of law.

3. If a building is adapted or designed for living in only in exceptional circumstances can it not reasonably be called a ‘house.’

The Court of Appeal (Mummery, LJ) considered that the above principles had been applied without taking into account the full factual circumstances. The requirement in the lease that the building should be used pretty much wholly as offices was persuasive. A consideration of the internal and external features was not enough.

Accordingly, at the relevant date the building was not a house within the 1967 Act and the tenant’s claim failed.

Mark Chick

9 March 2009