- "Designed or adapted for living in".
- Roof and other structural parts not demised.
- House(s) - one house?
- Block of flats
- Premises used for commercial purposes
"Designed or adapted for living in"
The leading case
 UKHL 5
The relevant statutory provision is s2 of the Leasehold Reform Act 1967 which is in the following terms:
“(1) For purposes of this Part of this Act, “house” includes any building designed or adapted for living in and reasonably so called, notwithstanding that the building is not structurally detached, or was or is not solely designed or adapted for living in, or is divided horizontally into flats or maisonettes; and—
(a) where a building is divided horizontally, the flats or other units into which it is so divided are not separate “houses”, though the building as a whole may be; and
(b) where a building is divided vertically the building as a whole is not a “house” though any of the units into which it is divided may be.
Section 2 of the Leasehold Reform Act 1967 provides that the term "house" includes any building "designed or adapted for living in" and "reasonably so called".
As per Lord Neuberger, s 2 involves a two part test. One looks first to see whether the property was originally designed for living in. One then goes on to consider whether work has subsequently been done to the property so that the original "design" has been changed.
Grosvenor's case was that the property was not as at the date of service of the notice "designed or adapted for living in" as the upper floors were unoccupied and very dilapidated. That argument was accepted by the Court of Appeal, Laws LJ saying that "because of the grave dilapidation apparent from the photographs the upper floors of the [property] were not at [relevant time] designed or adapted for living in". The House of Lords disagreed. The property was originally "designed or adapted for living in" and therefore fell within the definition of a "house".
Lord Neuberger (with whom all the other judges concurred):
- "It seems to me that, as a matter of ordinary language, reinforced by considering other provisions of the sub-section, and supported by the original terms of section 1(1), as well as by considerations of practicality and policy, the property was at [the relevant date] 'designed or adapted for living in' within section 2 (1). The fact that the property had become internally dilapidated and incapable of beneficial occupation (without the installation of floor boards, plastering, re-wiring, re-plumbing and the like) does not detract from the fact that the property was designed for living in, when it was first built, and nothing that has happened subsequently has changed that. While internal structural works will no doubt have been carried out to the property from time to time over the past 275 years, it seems very likely from the floor plans that its layout, in terms of internal wall partitions and staircases, has not changed much since the property was built. In any event, the upper three floors have always been laid out for residential use.
- 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? When asking either question, one is ultimately concerned to decide whether the purpose for which the property has been designed or adapted, was "for living in".
Roof and other structural elements not demised
 EWHC 792 (Ch)
Where a long lease of a property excluded the roof and other structural elements from the demise, the tenant was not a tenant of a leasehold house within the meaning of s1(1) Leasehold Reform Act 1967. The anti-avoidance provisions in s23 of the Act did not prevent restrictions on the demise, and the tenants did not have a statutory right to enfranchise under the Act.
The landlord of 11 semi-detached or terraced properties on an estate appealed a decision that the tenants were entitled to acquire the freehold under the Leasehold Reform Act 1967.
The respondent tenants held 99-year leases. The leases were in similar terms and included in the demise all internal coverings and walls. However, the structural parts of the premises, such as load bearing walls, roofs and foundations, were expressly excluded from the demise.
The tenants issued a claim to acquire the freehold under the 1967 Act. The landlord disputed the tenants’ statutory entitlement to acquire the freehold.
Whether the tenant under a lease which excluded the roof and external walls from the demise was a tenant of a leasehold house within the meaning of s1(1) of the Act.
The judge rejected the landlord’s legal argument that the properties fell outside s2(2) of the Act and held that the properties and/or the leases of those properties fell within the scope of the 1967 Act. Accordingly, the tenants were entitled to acquire the freehold title. However, if he was wrong on this point, the avoidance provisions in s23 were not engaged and the tenants were not entitled to acquire the freehold.
The landlord appealed, and the Claimants cross-appealed the decision that s23 did not apply.
Decision on appeal
The substantive issue turned on the construction of the phrase “a tenant of a leasehold house” in s1(1). Was it, as the tenants contended, “a tenant of part of a leasehold house” (or “a material part”), or was it, as the landlord contended “a tenant of the whole of a leasehold house”
In a carefully judgment, the judge considered the consequences of the alternative constructions. Under the tenant’s construction, a tenant would be entitled to a freehold conveyance that was more extensive that their leasehold demise. This could potentially result in the landlord losing economically significant property rights – for example if they had retained the roof space with a view to developing it as a separate flat in the future. Under the landlord’s construction, a landlord would have an obvious means of avoiding the 1967 Act – by excluding the roof and foundations from the demise.
Whilst recognising the difficulties arising from the landlord’s construction, the judge preferred this approach. The Act placed great emphasis on the physical characteristics of a house, including ‘vertical’ division of a building. Similarly, it was not clear that Parliament intended to expand the physical reach of a tenant’s demise.
The judge rejected the cross-appeal in relation to s23. The provision was not wide enough to cover a limitation on a tenant’s demise, and it could not serve to expand the tenants’ rights.
As the judge recognised, the decision provides landlords with a straightforward means of avoiding the 1967 Act. He considered however that prospective tenants would not purchase leases that contained an obvious device to avoid the Act, and that in some cases the role of a management company on a development justified limits to the property demised. There are some obvious flaws in this reasoning. Firstly, it will be cold comfort to those tenants who have already purchased such leases, which will now have reduced value. Secondly, it relies on experienced conveyancers spotting this loophole. And thirdly, there are other legal mechanisms to facilitate the management of a development, such as an estate rentcharge.
 UKHL 49
The House of Lords held that a house and a mews flat linked by a basement (which extended under both but was only used by one) and a door (between them at ground floor level) were not a single house for the purposes of s1 of the Leasehold Reform Act 1967. The case turned on the interpretation of material part of a house in s2(2).
 EWCA Civ 545
This is another case where the court had to consider whether or not two properties were a house. In this case they had been joined together and on the facts the court found that there was one house for the purposes of the 1967 Act. The reasoning in Malekshad applied.
Block of flats
 EWCA Civ 594
The Court of Appeal has held that building which was a block of flats could not reasonably be called a “house” for the purposes of the Leasehold Reform Act 1967 s2(1).
This case concerned a building that consisted of a self-contained flat on each of five upper floors above three shops and two flats on the ground floor. Although there had been alterations since it was constructed in 1888 it remained substantially as constructed. At first instance the High court decided that it was primarily a block of flats and was not therefore a house reasonably so called.
Whether the building was a house reasonably so called?
Decision on appeal
The Court dismissed the appeal.
LJ Lewison, who gave the leading judgment, cited extensive case law to establish the proposition put forward by the judge below that the question is not whether it is possible to call a building a house, but whether it is reasonable to do so i.e. the phrase “reasonably so called” had the effect of limiting what might otherwise be called a house.
He referred to a number of cases where judges had used the case of a block of flats to illustrate what might not be a house “reasonably so called”. He agreed with that approach in this case.
The Master of the Rolls gave a concurring judgment and said that a building:
- “constructed laid out and used as a block of substantial self-contained flats throughout its 120 years of existence cannot reasonably be called a house – at least in the absence of unusual factors”.
Although this building fell outside what is a house “reasonably so called”, it should not be assumed that a block of flats can never be a house. There will be buildings that were not originally constructed as flats, or have not always been laid out as such or are, not at the date of the notice used as such, all of which will cause difficulties.
What if it is used for commercial purposes?
Originally a house
 UKSC 41
Properties used entirely for commercial purposes are not "houses” within the meaning of the Leasehold Reform Act 1967.
This case involved conjoined appeals. The tenant in the first appeal had long leases of three terraced properties that were originally houses but were now used as short-term accommodation for tourists.
The tenant in the second appeal had a long lease on a property that was originally a town house but was now used as offices.
The tenants gave notice to acquire the freeholds of the properties under the Leasehold Reform Act 1967. Those notices were resisted by the appellant landlords on the basis that the premises were not houses under s2(1) of the 1967 Act as they could not be described as a "house reasonably so called"; and also that the premises were not a "house" as they were not "designed or adapted for living in".
The issue before the Supreme Court was the question of what is a house for the purposes of the definition set out at s2(1) of the 1967 Act. The court considered what were two separate but overlapping questions: whether a building is one that is “designed or adapted for living in”; and whether a building is a “house … reasonably so called”. Lord Carnwarth:
“The two parts of the definition are in a sense ‘belt and braces’: complementary and overlapping, but both needing to be satisfied. The first looks to the identity or function of the building based on its physical characteristics. The second ties the definition to the primary meaning of “house” as a single residence, as opposed to say a hostel or a block of flats; but that in turn is qualified by the specific provision relating to houses divided horizontally. Both parts need to be read in the context of a statute which is about houses as places to live in, not about houses as pieces of architecture, or features in a street scene, or names in an address book.”
In each case the Supreme Court held that the premises were not to be regarded as a house reasonably so called.
The first part of the above test: whether a building is one that is “designed or adapted for living in”, had been considered by the House of Lords in Boss Holdings v Grosvenor West End Properties Ltd  1 WLR 289. That case concerned an 18th century town house, the lower floors of which were in commercial use. The upper floors were dilapidated. It was held that the property had been “designed” for living in when it had first been built in the 1730s and nothing that had happened subsequently, including the internal dilapidation and unsuitability for immediate residential occupation, detracted from that fact. So in consequence a building that had no actual residential use could be a house reasonably so called.
The first part of the test was not in issue here but in reviewing the decision in Boss Lord Carnwarth added a gloss by suggesting that:
“Where a building is in active and settled use for a particular purpose, the likelihood is that it has undergone at least some physical adaptation to make it suitable for that purpose. That in most cases can be taken as the use for which it is currently “adapted”, and in most cases it will be unnecessary to look further.”
As to the second part of the test, i.e. whether premises were a house reasonably so called, Lord Carnwath reviewed the decision of the House of Lords in Tandon v Trustees of Spurgeons Homes  AC 755. He commented on the relative lack of weight given by the majority of the judgments in that case to the appearance of the buildings as a factor in considering this second part of the test.
He went on to deal with the decision of the Court of Appeal in Prospect Estates Ltd v Grosvenor Estate Belgravia  EWCA Civ 1281 where it was held that a building which had been designed and built as a house, but which for many years had been used almost wholly as offices, was not a house within the definition. He said:
“…in so far as Mummery LJ treated the use of the building, rather than its physical appearance, as determinative, his approach was in my view entirely consistent with the reasoning of the majority in Tandon as I have explained it. I consider that Prospect Estates … was rightly decided, and that the ratio need not be limited in the way the Master of the Rolls proposed.”
As in both of the cases that were the subject of this appeal, the use of the building was 100% commercial, they were not houses reasonably so called.
In this much anticipated decision the Supreme Court has provided very welcome clarification of the position in relation to the question of what is a house for the purposes of the second part of the definition set out in s2(1) of the Leasehold Reform Act 1967. It seems clear that, in essence, use is the determinative factor and if the premises are currently being used for entirely for commercial purposes they will not be a house “reasonably so called”.
Shop with accommodation above
No internal connection
 EWCA Civ 1111
A mixed-use premises comprising a shop with accommodation above was reasonably called a house even where there was no internal connection between the residential and commercial parts.
The Premises consisted of a ground floor purpose-built shop with residential accommodation on the floor above. This was part of a parade of shops of similar external appearance constructed in the 1920's. The ground floor shop was originally not self-contained as there was an internal staircase leading to the first floor. The accommodation on the first floor consisted of a sitting room, two bedrooms, a bathroom and W.C. with access to the ground floor kitchen and scullery via the internal staircase. In about 1970, the kitchen and scullery were removed and the space incorporated into the shop. At the same time the internal staircase was taken out and access to what became a self-contained first floor flat was provided by a new external staircase located in the back yard. The floor space occupied by the ground floor shop and the first floor flat was approximately equal.
Whether the shop and flat together was a house reasonably so called for the purposes of s2(1) LRA 1967?
HHJ Dight held that that the Premises did not constitute a house within the statutory definition contained in s2(1) of the 1967 Act so that the claimant company was not entitled to enfranchise. The tenant appealed to the Court of Appeal.
Decision on appeal
The Court of Appeal allowed the appeal. The Court pointed out that in Tandon v Trustees of Spurgeons Homes  AC 755 the House of Lords held that a shop with flat above was reasonably called a house. Further, in Hosebay Ltd v Day and Lexgorge v Howard de Walden Estate  1 WLR 2884, the Supreme Court explained the decision in Tandon as one turning on user.
Patten LJ, giving the judgment of the Court, held that this meant that claims to enfranchise buildings comprising shops with accommodation above should not be dismissed because the building is, “as a matter of ordinary speech, best described as a shop”. Further, these claims should not be dismissed just because the accommodation is not linked internally to the remainder of the building. He said:
“Tandon establishes that shops with accommodation above are, as a matter of law, reasonably to be described as houses for the purpose of s.2(1) provided that a material part of the building is designed or adapted for and used for residential purposes on the relevant date. County Court judges will doubtless be adept at dismissing cases where the conversion of part to residential user is not genuine or substantial or where the premises are not of the type which, as a matter of policy, Parliament intended to fall within the 1967 Act. A block of offices with a caretaker's flat would be such a case. But, these cases apart, there ought to be no warrant from now on for distinguishing between similar types of building solely on the basis of their external appearance or their internal layout.”
Property unused for many years
 EWCA Civ 190
A town house used in the past for mixed residential and office user and unused for a number of years was a house reasonably so called for the purposes of the LRA 1967. The Court of Appeal refused to interfere with the county court judge’s finding to that effect when he had properly directed himself by reference to the relevant authorities.
The case involved a large London townhouse 41 Upper Grosvenor Street with an annexed mews building 41 Reeves Mews which, following residential use by King Peter II of Yugoslavia until shortly after the Second World War, was used at times partially for office purposes with residential accommodation on an upper floor or upper floors and in the Mews. The unusual feature was that the Property was left totally unused for 13 years prior to the relevant date.
Merix said that on the relevant date the building was a house, admittedly with traces of former office user, but nonetheless a house. Grosvenor said that the building was a disused office building with some ancillary residential accommodation and, therefore, not a house. HHJ Gerald decided it was a house on the basis advanced by Merix.
The Court of Appeal rejected Grosvenor’s argument that the last user, or the last adaptation for use, was necessarily determinative of the character and identity of the building. The statute required the matter to be assessed at the relevant date. Turning the clock back to the time of the last user negated the statute. What the court has to do is to decide the building’s “present identity or function by reference to its physical character, whether derived from its original design or from its subsequent adaptation” at the relevant date (following Lord Carnwath at  in Hosebay). Past adaptation may have changed that identity or function, but the last user cannot be the only relevant consideration.
Once one reached that position an appellate court will be slow to disturb the findings of the trial judge who has had the benefit of an inspection.
McCombe LJ said as follows:
- “Various types of building must, it seems to me, be amenable to varying characterisation by trial judges, doing their best to apply the principles emerging from decided cases. Any other solution is simply 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.
- 80. Here the issue was whether this was a house, with traces of past office user, or was it a disused office building. Why, I ask, when a judge has taken full account (as this judge did) of all the guidance to be derived from precedent, should one overturn his assessment of whether or not this was a “house…reasonably so called”?”
The Court of Appeal declined to do so.