The Leasehold Reform Act 1967 provides a mechanism for tenants of houses under long leases to acquire the freehold of their properties. Under the Act, a house is a building which is designed or adapted for living in and which can “reasonably” be called a house. In recent years, however, a number of cases have opened the way for tenants of commercial premises to acquire the freehold of their properties using the legislation.

Hosebay v Day concerned three separate houses, originally constructed as separate dwellings, but subsequently divided into individual flats and used at the date of the tenant’s claim as short-term tourist accommodation.

The County Court judge at first instance held that even though the properties were now used for a commercial business, they had originally been “designed for living in”. They could also be reasonably called houses, because they looked like large townhouses externally. The commercial tenant was therefore entitled to acquire the freehold.

The High Court and the Court of Appeal, somewhat reluctantly, upheld the decision, but the Supreme Court allowed the landlord’s appeal.

It held that in deciding whether a building was designed or adapted for living in, it was more appropriate to look at a building’s current physical character rather than its original purpose. More importantly, it came to the sensible point of view that a building used wholly as a self-catering hotel could not “reasonably” be called a house. The fact the properties looked like houses could not displace the fact that they were used solely for commercial purposes.

Although the case provides important clarity on what properties will qualify under the 1967 Act, it is unlikely that this will be the last word on the subject.