Housing case law update: June 2023

Catherine Craven and Jane Goodier round up the latest housing law cases and court decisions of interest to housing associations and local authorities.

Avon Ground Rents Ltd v Canary Gateway (Block A) RTM Co Ltd [2023] EWCA Civ 616

Court of Appeal, 30 May 2023

The Court of Appeal has held that a shared ownership lease granted for a term of more than 21 years is a ‘long lease’ under the right to manage provisions within the Commonhold and Leasehold Reform Act 2002.

Avon Ground Rents Ltd was the freehold owner of a development that comprised two blocks that contained a number of flats. Block A had 97 flats, 17 of which were the subject of a head lease in favour of a housing association and underlet on separate shared ownership leases for terms greater than 21 years. Five of the shared ownership tenants had ‘stair-cased’ to 100 per cent, but the others had not. The other 80 flats were either leased to the housing association and underlet to social rent tenants or leased under conventional long residential leases.

The right-to-manage company (“Canary Gateway”) wanted to acquire the management of Block A. Avon Ground Rents argued that the shared ownership flats that had not been stair-cased were not let on long leases, meaning that the building would not qualify for the right to manage. Sections 76 and 77 of the Commonhold and Leasehold Reform Act 2002 specified what a “long lease” was for the purposes of the right to manage.

The First-tier Tribunal held that Canary Gateway was entitled to the right to manage Block A. It determined that shared ownership leases for terms exceeding 21 years were ‘long leases’, even where the tenants had not ‘stair-cased’ their shares to 100 per cent. This was upheld on appeal at the Upper Tribunal (Lands Chamber). Avon Ground Rents Ltd appealed.

The Court of Appeal, in dismissing the appeal, held that a tenant with a shared ownership lease, granted for a term exceeding 21 years, had a ‘long lease’ within the meaning of section 76 of the Commonhold and Leasehold Reform Act 2002 regardless of whether the tenant had a 100 per cent interest. Consequently, every shared ownership tenant in the development was a ‘qualifying tenant’ for the purposes of the Commonhold and Leasehold Reform Act 2002.

This decision confirms the definition of a qualifying tenant for the purposes of exercising a right to manage. As a lot of large residential developments contain a mixture of tenancies, this decision will assist those interested in obtaining a right to manage.

A copy of the judgment is here.

Healey v Fraine [2023] EWCA Civ 549

Court of Appeal, 19 May 2023

The Court of Appeal has held that the Land Registration Act 2002 did not change the meaning of adverse possession in regard to registered land.

Mrs Healey was the registered proprietor of a house. She lived in the house with four other people (“the appellants”). Mrs Healey issued a claim for possession against the appellants, arguing that they were in occupation of the property without ever having had her permission and were therefore trespassers. The appellants said that they had found the property abandoned and had claimed adverse possession and should be registered as proprietors.

Although this appeal primarily concerned amendments to the appellants’ pleading, it also, more interestingly, looked at the nature of adverse possession of registered land. The appellants sought permission to amend their defence, so that they could argue that they had been in possession as licensees. Mrs Healey opposed their application to amend their defence, arguing that it was inconsistent to both plead that they were licensees and that they had adverse possession. Mrs Healey argued that that from when the Land Registration Act 2002 came into effect, adverse possession could not be used as a defence to a claim for possession.

The Court of Appeal dismissed the appeal on both grounds. In regard to the issue of adverse possession, the Court held that Parliament had not intended to change the law on adverse possession through the Land Registration Act 2002. The Court concluded that there was “not the slightest hint in the Law Commission's commentary on its proposals in Part XIV of Law Com No 271 (headed "Adverse Possession") that it intended adverse possession to bear a different meaning in the draft bill from its existing and well understood meaning”. In fact, the Law Com 271 included statements to the effect that a person could not be in adverse possession if they were a licensee. Although the Act made far-reaching changes to the law on adverse possession, it did not change the meaning of adverse possession itself. Consequently, the Court held, and confirmed, that a person occupying a property under a licence could not be in adverse possession under the Land Registration Act 2002.

A copy of the judgment is here.

Catherine Craven and Jane Goodier are Senior Associates at Capsticks.