The Supreme Court yesterday began hearing an appeal concerning the forcible purchase of leasehold premises under the Leasehold Reform Act 1967.
The appellants in the case are Hugo Day and Lady Hilary Day, trustees of the Simon Day Settlement, who have brought the case after the Court of Appeal ruled in favour of the respondents, Hosebay Limited, in 2010.
The case concerns three properties in London's upmarket South Kensington area, which are currently occupied on long-term leases by an associate company of the respondents.
The properties are operated as short-term accommodation for tourists, under leases which were drafted in the 1960s and 1970s to run for up to 60 years.
The Leasehold Reform Act 1967 allows residential tenants to apply to purchase their homes at market rates providing certain conditions are satisfied. If the landlord refuses the Act includes the provision to purchase the freehold by force.
The intention of the act was to allow residential holders of long-term leases the security of being able to purchase the freehold on their property.
Hosebay served notice under the 1967 Act on the appellants in this case, in order to complete the forcible purchase of the freeholds to the buildings. Lawyers for the Appellants are arguing that the Act was designed to furnish some certainty for residential tenants, not for businesses.
Edwin Johnson for the appellants, told the court that the type of buildings covered by the Act are houses, not commercial premises.
"Parliament chose to confer the benefit on a particular type of property... That type of building is a house. These properties are plainly not houses," reported Bloomberg.
The outcome of the case could have wide ramifications for many other businesses operating in premises originally leased for domestic purposes but now used commercially.