Turn Your Business Leases into Freehold Ownership

A recent decision in the matter of Day v Hosebay Ltd has opened the doors for businesses to claim rights to buy the Freehold of their premises under the Leasehold Reform Act 1967.

The Act specifies that "business tenancies" are exempted from the Act and, therefore, the tenants under such tenancies would not have the right to acquire the Freehold of their building.

Hosebay Ltd occupied their premises and ran the same as high-end short term apartments on a similar basis to a hotel.

In order to attempt to sidestep the legislation, Hosebay sub-let the premises to an associated company which then took on the business leaving Hosebay Ltd as simply the tenant of the premises but importantly, not in occupation.

The Court decided that despite the open and obvious attempt to sidestep the legislation, the transaction was legitimate and did bring Hosebay Ltd inside the scope of the Act and, therefore, Hosebay Ltd was entitled to exercise their right to buy the Freehold.

This case concentrated on two elements, namely the question of whether this remained a "business tenancy" and secondly, whether the premises could be a "house" in the meaning of the 1967 Act.

The law is quite vague on that particular point and the best that has been achieved to date in respect of that definition is that a building does come under the terms of the Act if it is "a house reasonably so called". It very much depends upon the nature, design, characteristics and use of the building as to whether such premises can be called a "house".

A house does not have to be  residential premises in order to fall inside the Act.

For queries in respect of the purchase of Freehold or other enfranchisement related queries, please contact Gary Scott.