When is a Residential Lease, a Residential Lease? A House, a House? 1967 Act

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    When is a Residential Lease, a Residential Lease? A House, a House? 1967 Act

    When is a House a House?

    In determining whether my (former pub) home is a "House" or a Commercial Premises, I was pointed towards a series of legal precedents (Merix, Hosebay, Boss etc) in which it becomes clear that my (former pub) home is a "House".

    According to the Leasehold Reform Act 1967 it is a "House", when the building is "designed or adapted for living in and reasonably so called"


    Now, I need to determine if my Lease is "Residential" or "Commercial"?

    The lease is not entitled "Residential Lease" or "Commercial Lease" - it does allow for change of use to any type, with Freeholder's consent.

    But the lease only talks about the use as a pub - no mention is made of the substantial living accommodation upstairs that was an original part of the structure since before the current lease.

    It has been 100% used as a single residence (my home) since the pub closed in 2008.


    Can anyone point me to similar laws, legal precedents (rulings) etc that would help me clarify this too.

    If it is a "Residential Lease" and the freeholder contests that there are breaches in it, then the Freeholder must get these breaches "finally determined" by the Property Tribunal..., before they can issue any s.146 Notice... (https://www.lease-advice.org/advice-guide/service-charges-other-issues/#32 s.11 Forfeiture and Possession)

    If it is a "Commercial Lease" and the freeholder contests that there are breaches in it, then the Freeholder can immediately issue an s.146 Notice (or not even that, if they claim rent arrears)...

    So:

    When is a Residential Lease, a Residential Lease?
    &
    When is a Commercial Lease, a Commercial Lease?

    Our Freeholder (landlord) is no reasonable person. So asking reasonably for any consent, dealing with disputes, seeking to purchase the freehold informally is all quite impossible. I would like to know we have the safeguard of the Tribunal in the mean time, and that we can force the Freeholder to sell us the freehold at a fair price, under fair conditions once we are ready to make this leap.

    I do not need any "common sense" answers, this is self evident - it is my home!
    I need to know where this is legally defined - for the purposes of knowing which enforcement regime applies to my home.

    Thanks

    #2
    What does the registration of property title at Land Registry say - is it a freehold house or leasehold flat ?

    Comment


      #3
      "Freehold Land" - for the landlord's title
      "Leasehold Land" - for the my title
      No mention of pub, house, flat or anything else

      Comment


        #4
        I have looked this up on a number of other property registers at HMLR and they are all the same - none mention house, flat etc - just "Land" (I know that in law "land" includes ground and building built on it)

        Comment


          #5
          Can you look at the site plan attached with leasehold title ?

          How does it compare in ground area with the site plan for freehold title ?

          Comment


            #6
            De facto your house is a house. The question is whether it being used as a house is a breach of covenant and, if it is, whether the covenant has been waived. If consent for the change of use was obtained there is no problem. If no consent was obtained, I would suggest that too much time has lapsed for the landlord to take the point. However, the general principle is that a person cannot benefit from their own wrongdoing. If you had changed the use last week without consent then you would have no right to enfranchise.

            I suggest you serve notice to enfranchise on the landlord and see what happens.

            Comment


              #7
              On Gordon999's point - the ground area of the leasehold is a small fraction of the freehold - the Freehold lists about 10 areas, within the Freehold area, that have already been leased out - we are marked out as plot 3 within the freehold

              Comment


                #8
                On Lawcruncher's point:

                What I need to know is whether my lease is a "Commercial Lease" or a "Residential Lease".

                I can see that ever since the 1967 Act on enfranchisement, the courts have been tortured in trying to define a house is a house.

                On the point you made that I might not have the right to enfranchise if the change of use was without consent, I quote what Lord Neuberger said in his Court of Appeal landmark decision 2010 re: Hosebay:
                1. The view that the question of whether a building is a "house ... reasonably so called" depends, at least in the main, by reference to its physical appearance and character also seems to me to accord with the natural meaning of those words, the other provisions of section 2(1), and the analysis in Boss Holdings [2008] 1 WLR 289. One could, it seems to me, quite naturally describe a building built as a town house, which had subsequently been internally converted into offices, as a "house used as offices": hence it would "reasonably [be] called" a house, even though it was not used for residential purposes, and even if it was not permitted to be so used. If most [reasonable] people were asked whether a building could reasonably be called a house, I am not convinced it would occur to them to ask about the permitted use under any lease, or that they would be influenced if told what the permitted use was. Section 2(1) also refers to buildings which are "structurally detached", "divided horizontally" and "divided vertically" – all concerned with physical state not use. In Boss Holdings [2008] 1 WLR 289, paragraph 17, the House of Lords said that, when deciding whether a building had been "designed or adapted for living in", "one is largely concerned with the physical state of the property".
                I can see that my home is a "House" for the purposes of the 1967 Act for a number of reasons, even if it was and is not a permitted use, as Lord Neuberger said above.

                The questions still remains, is my lease "Commercial" or "Residential" and why do I hear lawyers using these specific terms all the time, if they appear to have no status in statute, precedent, regulations or otherwise that I can find. I presume I am missing something and I would be glad if anyone could point out the "obvious" to me!

                Thanks

                Comment


                  #9
                  Originally posted by Lionheart View Post
                  The questions still remains, is my lease "Commercial" or "Residential" and why do I hear lawyers using these specific terms all the time, if they appear to have no status in statute, precedent, regulations or otherwise that I can find. I presume I am missing something and I would be glad if anyone could point out the "obvious" to me!
                  "Lease" can refer to the document which creates a tenancy or to the actual tenancy.

                  The first point to make is that tenancies are not intrinsically one thing or another. Without getting caught up in precise definitions a tenancy is the exclusive right to possess land. Under landlord and tenant law, if there are no restrictions imposed the tenant can use the premises for whatever he likes.

                  From a general point of view when a tenancy is described as being one thing or another it is the use to which the premises are put which is considered though the physical aspect may come into it.

                  When a lawyer is talking about documents "commercial lease" means a lease containing provisions appropriate for a tenancy of commercial premises and "residential lease" means a lease containing provisions appropriate for a tenancy of residential premises.

                  When we get to statute things get a bit more specific. The Landlord and Tenant 1954 says: '“business” includes a trade, profession or employment and includes any activity carried on by a body of persons, whether corporate or unincorporate'. That definition is rather wider than what many would consider is a business. The important thing is that the definition is relevant only for the statute is question. The Landlord and Tenant Act 1927 has a different definition of business.

                  The definitions in the Acts referred to concentrate on use. The Leasehold Reform Act 1967 is different as it homes in on appearance. It basically says: If it the man in the street thinks it is a house it is a house. Use does not come into it nor anything the lease says about use. That contradicts what I said above. On reflection the Act does not say the property has to be used as a residence, nor does it say that it cannot be a house if the lease prohibits residential use. It just has to be reasonably considered a house. Accordingly, whether or not you have a residential lease is not a question which needs answering.

                  However, if the tenant, without obtaining consent when it was required, has done something to the property to change it from something which could not reasonably be considered a house to something which can reasonably be considered a house, I think the landlord is entitled to object on the grounds that the tenant has obtained a benefit (the right to enfranchise) by his own wrongdoing. If he has acquiesced in the breach he may though have lost the right to object.

                  Whatever the position may be (and it is not crystal clear) you have nothing to lose by serving a notice under the 1967 Act. If the landlord maintains that the notice is invalid becasue the Act does not apply you can either agree and call it a day, or stand your ground. If you are going to do that, I am not sure that you are going to get much further on what the law is without taking counsel's opinion.

                  Comment


                    #10
                    1. What is the number of years at start of your lease for plot 3 ? and What is annual ground rent for your house ?

                    2. I think you can apply to a local Magistrates Court for confirmation that your property is a "residential house" converted from former pub and eligible for enfranchisement under the 1967 Act .

                    Comment


                      #11
                      The lease was signed in 1981, starting from 1974 (?!) for 99 years to 2074 at a fixed ground rent of £320 per year, to be paid in 2 instalments of £160 in June and £160 in December every year. The lease states that the lessors can offer to the lessees a further 99 year lease (though, it seems that the lessor is not obliged to, so I wonder why this is even mentioned, as the lessor can always offer the lessee an extra 99 years or whatever if he wants to?)

                      Why do you suggest going to the (mostly criminal) Magistrates Court and opposed to the (civil) County Court? What procedure / application are you suggesting that might cause such a court to "confirm" that it is a "residential house"

                      Lawyers use the terms "Residential Lease" and "Commercial Lease" all the time and with apparent great authority. However, I have not been able to find a law or other statutory instrument that uses such terms, yet alone anything that might define what these mean (specifically) in law.

                      Is this just lax talk by lawyers? Do these terms have no meaning in law? Or have I missed something?

                      Why does the size of the Freehold plot in relation to the leasehold plot matter to you?

                      The leasehold has the signature & seal of the Freeholder, but not the signature of the leaseholder who took it up (even though the initial leaseholder/tenant is given as Whitbread repeatedly in the lease).

                      The document does not mention any price paid nor anything about "rateable values" at the time (1981 or 1974).

                      We are trying to ask the VOA, Council and Water Undertakers if they have such information, but are being passed from pillar to post at present.

                      I wonder if the landlord gave the 99 year lease in return for Whitbread building a pub on it, at Whitbread's (tenant's) own expense. I read that such "in kind" consideration for a lease of open land is quite common - But neither such an "in kind" or monetary consideration arrangement is mentioned in the lease.

                      The building was built in the early 1960's, before planning regulations came into affect. The present lease was signed & sealed only by the Freeholder in 1981, giving Whitbread the lease from 1974 to 2074 without Whitbread signing any of it.

                      Given that Whitbread is clearly and repeatedly cited as tenant in the document, I do not understand why they weren't signatory to it.

                      And I am intrigued to find out what the history of the plot was - before the pub was built, in the 1960 when it was built, what happened at 1974 and why was the present lease granted in 1981, but runs 99 years from 1974?

                      Any light you can shed on this matter would be greatly appreciated.

                      Comment


                        #12
                        Thank you Lawcruncher, your frank and stark explanation of the near inexplicable is greatly appreciated. This was the position I was coming to, I just wasn't sure it could really be such. It is nice to hear someone with experience confirming what seemed to be becoming clear to me.

                        And yes, I might not get any greater clarity from counsel, as it is all so unclear to everyone. I am about to start wading through the Law Commission's 568 page Consultation Paper on Leasehold Enfranchisement - what the situation is now, criticisms of it and proposal to make it work better. This might give me a better, deeper, more accurate insight than any counsel, beleaguered as they may be by the messy state of the law. I have also bought the legal tome "Hague on Leasehold Enfranchisement" that everyone keeps referring to.

                        It will be quite some undertaking, taking this all on board and analysing it correctly.

                        I then want to draw up a balance sheet of points that support my case and detract from it. I will then spend some months (even years if necessary) addressing as many of the detracting factors and strengthening any of the supportive matters. And only when I feel certain of victory, will I strike with a "notice" as I would not wish to risk my home unnecessarily.

                        In this, I am reminded of pseudo-Korean war advice from the James Bond film, Die Another Day: "In war, the victorious strategist only seeks battle after the victory has been won (Art of War)"

                        I am just trying to nail down some of the basic concepts, build on a solid basis, before I launch myself any further into this odyssey.

                        And then again, there is my mild autism, that makes it impossible for me to take on any such task without nailing down each and every detail, in extremis, which while an obvious burden, might also be the winning hand - I suspect this matter will turn on the detail - which is what I'm best at.

                        Comment


                          #13
                          Originally posted by Lionheart View Post
                          In this, I am reminded of pseudo-Korean war advice from the James Bond film, Die Another Day: "In war, the victorious strategist only seeks battle after the victory has been won (Art of War)"
                          Somewhat off topic, but this is actually a partial quote of a partial quote, and its origins are Chinese and Minus 6th Century, not Korean and 20th Century:

                          Comment


                            #14
                            Originally posted by Lawcruncher
                            However, if the tenant, without obtaining consent when it was required, has done something to the property to change it from something which could not reasonably be considered a house to something which can reasonably be considered a house, I think the landlord is entitled to object on the grounds that the tenant has obtained a benefit (the right to enfranchise) by his own wrongdoing. If he has acquiesced in the breach he may though have lost the right to object.
                            This is an interesting one. Despite the lease making no mention of the accommodation upstairs, it was never more than 70% pub and the changes (any wrongdoings) were made by the previous leaseholder(s) who was ousted, when the court vested the leasehold in me. What I received was a shell of a building, gutted out, back to the brick, ready for demolition. Joseph Holt originally breached the lease in 2008 by stopping running a pub in the place. This defaulted use to 100% accommodation by default, by inaction of any leasehold owner or the freehold owner. The lease and the history of the use of the building is a mess - fertile territory for a details man like me.

                            If not a house, then what? Certainly not a pub - the Freeholder fully accepts it has no viable existence as a pub.

                            And an interesting oddity of history. It would seem that Public Houses started off lives as houses (people homes) in which magistrates allowed the owners to brew and sell beer. The magistrates did this on a very restricted basis, so restrictive that Parliament introduced the Beerhouse Act 1830 to free this up, that allowed anyone, who paid a 1 guinea fee to brew and sell beer from his "beerhouse". Huge numbers of houses were used as beerhouses. Landowners sought to restrict this, by stating in covenants that the house could not be used to make or sell beer. Drunken, disorderly behaviour became such a problem that the Beerhouse Act was eventually abolished and the beerhouses that wanted to remain trading, came under the licence of the magistrates etc again. Hence there is a strong, inherent argument to say that all Public Houses are Houses for the purpose of the 1967 Act as all were "designed or adapted for living in and so reasonably called" - even before the pub use here stopped, the house was gutted and then re-plumbed, re-wired, re-plastered etc

                            And I wonder whether any wrong-doer could be benefiting from the compulsory purchase of the freehold at a fair price - the Freeholders accept the building has no viable existence as a pub, they have no idea what they want it to be (just not abandoned) and are clear that they don't want the responsibility for the building back in their hands!

                            Comment


                              #15
                              The reference above to the Magistrate's Court should be to the County Court, which has power granted by section 20 LRA 1967, amongst other things, to determine whether a person is entitled to acquire the freehold of a house.

                              The provision in the lease that the lessors can offer a new lease does seem a bit odd. Perhaps you can quote the clause verbatim.

                              The fact that the lease was granted in 1981 for a term starting in 1974 is possibly explained by a contract to grant a 99 year lease being signed in 1974. The contract may have been conditional on a number of factors or the tenant may have been granted an option in 1974 which was not exercised until 1981.

                              The lack of signature by the tenant is easily explained. When a lease is granted the tenant needs a copy to prove he has a tenancy and the landlord needs a copy so he has a written record of what tenant has agreed to do. Under the old stamp duty there was a bit of an odd rule which provided that any copy of a lease executed by the landlord was charged with full duty. Accordingly the practice arose of the lease being signed by the landlord and a counterpart lease being signed by the tenant. On completion the documents are exchanged so that the tenant has the lease (chargeable with full duty) and the landlord the counterpart (chargeable with nominal duty). Whilst this is the invariable practice (except in the wonderful world of BTL where they make it up as they go along) strictly only a document signed by the landlord is necessary to grant a valid lease.

                              It sounds very much as if the lease is a "building lease", that is a lease granted of open land on which the tenant builds something. Rather than selling the land the landlord gets a guaranteed income in the form of a ground rent which is calculated at a rate applicable to the land with no buildings on it. The tenant does not have to buy the land. He calculates that the sort of building he wants will have a useful life of less than 99 years and which is a wasting asset in his accounts (or something like that).

                              Why do you think that making a wrong move will put your home at risk?

                              Comment

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