Can you Enfranchise a "house"?

To satisfy the test of whether a building is a “house” under Section 2(1) of the Act, the building must be “designed or adapted for living in” and “a house reasonably so called”.

The judgement stated both parts are complementary and overlapping but need to be satisfied at the date of the notice of claim. When considering whether a house is “designed or adapted for living in” it is necessary to look at the identity or function of the building based on its physical characteristics. When deciding whether the building can “reasonably be called a house” it is necessary to consider its settled use rather than its physical appearance.

On this basis, the buildings in Day v Hosebay (which were converted into flatlets for use as short term accommodation for students or overseas visitors) could not be called houses. The fact they look like houses or be referred to as houses was not sufficient: their use was entirely commercial. In Howard de Walden v Lexgeorge, which concerned a town house in Marylebone sub-let as offices to a solicitors firm, since it was wholly used as offices it could not be a “house reasonably so called”.

The judgment, which contains both legal and policy reasons, is aimed at closing the loophole that allowed tenants of commercial buildings to acquire their freehold. Consequently, numerous claims have been withdrawn, including those in Mayfair, Harley Street and Chelsea.

Practitioners now have to consider how best to apply the test going forward. The internal and external characteristics of the property and its current use at the date of the claim must be considered. If the “function” of the building is to be lived in then it will be a “house”. If wholly or even substantially in commercial use it is unlikely to qualify.

The problem is the test appears to rely on the use of the building at the date of the claim notice. If correct, a tenant need only vacate a building prior to claiming. It is also difficult to see how the test is applied to a mixed use building or one stripped out so none of the previous design or adaptation is apparent.

Another issue is what constitutes commercial use. Here, short term letting of studio flatlets was a commercial use and each building could not “reasonably be called a house”. However, where a property is subdivided into flats let for slightly longer periods, when does it become a place to “live in” rather than a business? Although the judgment is clear that a building wholly in commercial use will not qualify, it is not the final word on “houses” everyone had hoped for.

Natasha Rees is a Partner at Forsters LLP