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When is a House not a House?

Executive Summary: The Court of Appeal has held on the facts that a London townhouse, parts of which had formerly been used as office space, was nonetheless a ‘house’ for the purposes of the Leasehold Reform Act 1967 [1]. This decision is important for landlords of similar properties which are let under a long lease as their tenants may have a statutory right to buy the freehold even where the property bears some of the features of commercial use.

Facts: This case concerned a claim under the Leasehold Reform Act 1967 (the “Act”) that a London townhouse leased by the claimant was a ‘house’ within Section 2 of the Act and that the claimant was entitled to purchase it.

The property had historically been used partly as office space and partly for residential use and had more recently been vacant for 13 years. There were still traces of previous office use and the Landlord argued that this history of commercial use meant that the property was not a ‘house’ for the purposes of the Act. The lower court held that the character of the building was residential and that it was a ‘house’ for the purposes of the Act.

Judgment: The Court of Appeal refused to overturn the lower court’s decision on the basis that the lower court was better placed to decide on the facts. It held that attempting to strictly define a house in this sense was a recipe for ‘an endless chain of appeals to the higher courts in an attempt to achieve a formal legal characterisation of individual properties to no advantage at all to the litigants involved’.

Conclusion: This case is important to Landlords in that it leaves an element of uncertainty as to whether similar premises would be considered ‘houses’ under the Act even where there has been some commercial use. Landlords should, if they are intending to sell, consider whether the Act applies and if in any doubt seek advice.

[1] (Mayfair) Estate v Merix International Ventures Ltd and another [2017] EWCA Civ 190

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