Right to Buy - Can Tenants Buy Their Commercial Property?

A recent decision of the House of Lords may have opened the door for thousands of tenants of offices and other properties originally designed to be used as homes to be given the right to buy their properties.

The Leasehold Reform Act 1967 gives a long leaseholder of a house the legal right to purchase the freehold according to a set procedure. The Act does not apply to commercial premises – but the House of Lords’ decision suggests that in some circumstances commercial tenants may acquire the right to buy the property.

The question turned on whether the premises in question were a ‘house’. The Act defines a house as premises which are designed or adapted to be lived in and which can reasonably be called a house.

In the case in point, the building was used for commercial purposes but had originally been designed as a residential property. The Lords considered that the fact that the premises themselves were not habitable was not relevant. The strict construction of the law meant that since the premises were designed to be lived in, the right to buy applied. It is quite clear from the judgment of Lord Walker that the Lords consider that a property which is of ‘mixed’ use, having been adapted for residential occupancy, would also qualify as a house for this purpose.

The Land Registry publishes occasional practice guides on changes to the law relating to property and property rights.