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Hotels and offices are not ‘houses’, Supreme Court rules

Lord Neuberger's Court of Appeal ruling overturned

10 October 2012

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A ‘self-catering hotel’ and a building used entirely as offices are not ‘houses’ for the purposes of the Leasehold Reform Act 1967, the Supreme Court ruled today.

In doing so, the justices overturned a judgment by their new president, Lord Neuberger, in his previous position as Master of the Rolls.

Delivering judgment on behalf of the Supreme Court in Day v Hosebay and Howard de Walden Estates v Lexgorge [2012] UKSC 41, Lord Carnwath said: “The Leasehold Reform Act 1967 is on its face a statute about houses, not commercial buildings.

“The buildings with which we are concerned were originally designed and used as houses, but at the relevant date were used entirely for commercial purposes, one for offices, the other (in the judge’s words) as a ‘self-catering hotel’.

“In both cases the courts below felt constrained to hold that they were ‘houses’ within the meaning of the 1967 Act, with the consequence that the lessees were entitled to ‘enfranchise’, that is, to acquire the freeholds compulsorily from their lessors on the terms fixed by the Act.”

Lord Carnwath said that Lord Neuberger “regretted this result” and “from the material we have been shown, he was clearly right to think that his interpretation did not reflect parliament’s intentions”.

The court heard that Hosebay concerned three properties in South Kensington, originally built as separate houses. The trial judge found that the buildings had been converted to provide ‘short-term accommodation for tourists and other visitors to London’, what she described as a ‘self-catering hotel’.

Lord Carnwath allowed the appeal on the grounds that the building was not a ‘house reasonably so called” within the meaning of the Act.

“The fact that the buildings might look like houses, and might be referred to as houses for some purposes, is not in my view sufficient to displace the fact that their use was entirely commercial.”

He went on: “I agree with the appellants (and the judge) that ‘living in’ means something more settled than ‘staying in’; and that the present use does not qualify as such.

Lexgorge involved an 18th Century house in Marylebone, listed Grade II, which was entirely used an office in 2005, when the notice was served under the Act.

“In Lexgorge I would also allow the appeal on similar grounds. A building wholly used for offices, whatever its original design or current appearance, is not a house reasonably so called.

“The fact that it was designed as a house, and is still described as a house for many purposes, including in architectural histories, is beside the point.”

Lord Carnwath allowed both appeals. Lords Phillips, Walker, Mance, Clarke, Wilson and Sumption contributed to the judgment.

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