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Garden Squares and Leasehold Enfranchisement – Court of Appeal Ruling

Many flat tenants are licensed to make use of a common garden, but what happens to those rights if they acquire the freehold of their homes? The Court of Appeal considered that issue in the context of one of London’s famous garden squares.

Tenants of a block of flats in the square had formed a company, through which they intended to exercise their rights under the Leasehold Reform, Housing and Urban Development Act 1993 to acquire the property’s freehold. Under the terms of their leases, they and others were licensed to make use of the garden at the heart of the square, but such rights could be revoked by the freeholder at any time.

It was not in dispute that the freeholder would retain ownership of the garden, but an issue arose as to the rights the tenants would enjoy in respect of it following completion of the acquisition. The freeholder had revoked their rights to use the garden but, crucially, that had not been done until after the tenants had given formal notice of their intention to acquire the freehold.

The case hinged on Section 1(4) of the Act, which states that tenants who exercise their leasehold enfranchisement rights can also acquire permanent rights in respect of other properties. Those rights would be, as nearly as maybe, the same rights that they had enjoyed prior to the acquisition.

In dismissing the freeholder’s challenge to an Upper Tribunal ruling in the tenants’ favour, the Court found that, on a true interpretation of Section 1(4), the completion of the freehold acquisition would have the effect of converting the tenants’ revocable licence to use the garden into a permanent and irrevocable right to do so.

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