Monthly Archives: March 2011

Lexgorge/ Hosebay Appeals

The Supreme Court has granted leave to appeal the decision of the Court of Appeal in Lexgorge. It appears that the deWalden Estate has certainly not given up the fight. The Grosvenor Estate has also intervened as an interested party.

So, the argument continues to run about what constitutes a house for the purposes of the 1967 Act.

Subsequent reforms to the legislation have meant that property originally designed for residential purposes (and indeed possibly adapted to another use) will qualify for the right to purchase the freehold even if not all of the property is being used for residential purposes at the date of the claim. This may be in part regardless of whether some or all of the terms of the lease restrict the use of part of the property away from residential use.

Provided that the property fits the basic criteria – namely that the lease in question was for 21 years or more at grant and that the property comprises the whole of the ‘house’ in question with no ‘material’ degree of overlap.

The tenant needs to have the majority of the occupational interest – although a lease subject to a lease of a flat forming part of the whole will qualify provided that a residence test can be satisfied. Apart from that there are few restrictions in terms of the identity of the tenant, which generally does not need not be in ‘residence’ and need need not be an individual.

If there is a business tenancy then it must be for at least 35 years. If the tenancy is one with 1954 Act protection it will not qualify, however, this requirement can often be subverted by the tenant going out of occupation and sub-letting to a related entity.

The position for mixed use property is likewise not good from the landlord’s perspective as the law currently stands.

For instance a shop with a flat above, held on a single lease, where the tenant is not in occupation for business purposes will qualify. The leading case being Tandon from 1982.

The law on this point was developed when there was a residence test and the removal of this following the 2002 Act reforms has not impacted on the enfranchiseability of this sort of building – despite the best efforts of landlords to attempt to suggest otherwise (see the Hareford decision).

The law in this area is ripe for re-examination and Lord Neuberger almost hinted as much in the Court of Appeal decision in Hosebay when he mentioned the law of ‘unintended consequences’.

It will be interesting to see whether the Supreme Court will take this opportunity to provide a greater degree of clarity in this area.

Mark Chick