Home > News > High Court decides when premises under construction become a “flat” for the purposes of leasehold enfranchisement the Leasehold Reform, Housing and Urban Development Act 1993

Aldford House Freehold Ltd v (1) Grosvenor (Mayfair) Estate (2) K Group Holding Inc [2018] EWHC 3430 – Monday 17 December 2018

The case concerned a high value block of flats fronting Park Lane in Mayfair. A group of tenants sought to exercise the right to collective enfranchisement. The owner of the headlease, K Group Inc, and the freeholder, Grosvenor Estate, resisted the claim on various grounds, including (a) some of the tenants had not authorised their solicitor as a matter of foreign law (b) three were disqualified because they held their flat under two leases with different landlords (c ) premises on the sixth and seventh floors were “flats” held by four qualifying tenants, with the effect that the claim failed because they had not been specified in the s13 notice and in any event there were not sufficient participating tenants to form a majority.

The crucial issue was whether the premises were flats. There had been two flats on each of the sixth and seventh floors, but they have been gutted and extended to double their size, and then divided into two units. They had been constructed to shell finishes, but had no services and were uninhabitable. They had been demised on separate long leases to different companies, and the only permitted use was as flats both under the terms of the leases and the relevant planning permission. The tenants argued that they were not “flats” because they had not yet been constructed or adapted so they could be used as flats. Fancourt J rejected that argument. He held that they had reached the stage of being separate sets of premises, and their intended purpose was as flats. That was sufficient. This is a significant decision for the purposes of the Leasehold Reform, Housing and Urban Development Act 1993, as although there are numerous decisions on what amounts to a “house”, there is very little authority on what amounts to a “flat”.

Fancourt J also held that one of the tenants, which had corporate directors incorporated in Panama, had not validly authorised the solicitor to sign the notice. Other tenants, with corporate directors incorporated in Gibraltar and the Bahamas, were held to have given proper authority. This is a reminder to practitioners of the need to get proper authority, especially from offshore companies where the formalities can differ.

Fancourt J also held that three tenants were disqualified because they held under two landlords.

The result was that the claim was dismissed. Permission to appeal has been granted on the “flats” issue and one of the company law issues.

Thomas Jefferies acted for K Group, led by Stephen Jourdan QC.

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