The House of Lords in Boss Holdings Ltd v Grosvenor West End Properties Ltd, has given a reasonably wide interpretation as to the definition of a house, a decision that will be welcomed by enfranchising tenants, but not by landlords. This particular case concerned the right to buy the freehold of a house under the Leasehold Reform Act 1967. Both the High Court and the Court of Appeal had determined that the property in question, 21 Upper Grosvenor Street, London W1, was not a ‘house’ within the meaning of the 1967 Act and was not therefore enfranchisable. The House of Lords reversed this decision in a bold pro-tenant move.
The property was built in the 1730s as a single private residence consisting of basement, ground and four other floors. It remained in private occupation for many years but during the Second World War was occupied by the Free French Government in Exile and after that was used for mixed residential and business use until the 1990s, when it was vacated. Subsequently, the top three floors were stripped back to their outer skin, although the staircase, internal walls and floor joists were not removed.
In October 2003, the tenant, Boss Holdings, served a notice to acquire the freehold from the Grosvenor Estate. When Grosvenor served its counter-notice, it disputed Boss’s right to acquire the freehold on the basis that the property was not a ‘house’, because it was not physically fit for immediate residential occupation and not therefore ‘designed or adapted for living in’ as required by the legislation.
A dilapidated house is still ‘designed or adapted for living in’
Lord Neuberger gave the leading judgment. He was of the view that the fact that the property had become internally dilapidated and incapable of occupation without the installation of floor boards, plastering, wiring, plumbing and the like, did not detract from the fact that the property was designed for living in, when it was first built. Nothing had happened subsequently to change that. He added: ‘In my judgment, the words “designed or adapted for living in”, as a matter of ordinary English, require one first to consider the property as it was initially built: for what purpose was it originally designed? That is the natural meaning of the word “designed”, which is a past participle. One then goes on to consider whether work has subsequently been done to the property so that the original “design” has been changed: has it been adapted for another purpose and if so what purpose?... one is ultimately concerned to decide whether the purpose for which the property has been designed or adapted was “for living in”.’
In Lord Neuberger’s view, the issue of whether a property is fit for immediate residential occupation, the test adopted by the courts below, would create uncertainty. It might be a matter of debate whether a particular property was so fit if it had no bathroom or no kitchen, or if there was no sitting room. The resolution of such issues would inevitably be subjective in most cases. The Lords left open the slightly larger question of whether a property could still be a ‘house’ if it had been designed for living in but had subsequently been adapted to another use.
Key Point: In overturning the Court of Appeal, the House of Lords has opened the way for property investors to use the leasehold enforcement legislation to acquire the freehold of houses even though the property in question may not be used for residential purposes.