Enfranchisement: Whether unfinished flats were classed as ‘dwellings’ for the purposes of a claim for enfranchisement (Aldford House Freehold Ltd v Grosvenor (Mayfair) Estate and another – 2019)

Where renovation and construction works have been undertaken to flats within a building, the courts were asked to determine whether the new spaces could be classed as ‘dwellings’ so as to meet the statutory requirements of enfranchisement.

The background

In Aldford House Freehold Ltd v Grosvenor (Mayfair) Estate and another [2019], notice was served by the nominee purchaser in July 2015 to exercise rights of collective enfranchisement. On consideration, only 13 participating lessees were qualifying tenants. Under s.13(3)(d) of the Reform, Housing and Urban Development Act 1993 the notice must contain the names of all qualifying tenants of specified flats. The initial notice in Aldford did not contain the names of tenants in four flats on the sixth and seventh floors. These flats had been stripped out and extended, with two new flats on each floor. No internal walls or other fittings, including pipework, cabling and so on, were in place at the date the notice was served, but each flat had separate access.

At first instance, the judge found that the spaces on the sixth and seventh floors were ‘flats’ and therefore held that the notice was not validly served, as it had not been served by tenants amounting to ‘not less than half the number of flats contained in the building’. The number of flats in the building was therefore critical to the subsequent appeal; the first instance judge found that there were 30 flats.

The decision

The Court of Appeal allowed the appeal by the nominee purchaser, finding that the four new spaces could not have been used for residential purposes at the time the notice was served due to their condition. To be defined as a flat, a property needs to be suitable for use as a dwelling, which these were not.

The building at the time the notice was served therefore comprised only 26 units, and with 13 qualifying tenants named, the notice was found to have been validly served.

Advice and action

A note of caution for landlords and a point to be aware of, this case carries a straightforward message. Where flats under construction are unfinished and could not be habitable at the time a notice to exercise rights of enfranchisement is served, those units do not count towards the total number of flats in a building and should be excluded when assessing whether a notice has been served by an appropriate number of qualifying tenants.