As we approach the Holiday Letting season – When does a house stop being a home?

as-we-approach-the-holiday-letting-season-when-does-a-house-stop-being-a-home

Ref. Moore v Secretary of State for Communities and Local Government & Anor [2012] EWCA Civ 1202 (18 September 2012)

The Court of Appeal was asked late last year to pass judgement on a case presenting a key issue for property owners: at what point does a residential ‘dwelling’ (or ‘dwellinghouse’) become subject to a change of use when it is used for commercial holiday and leisure letting?

In passing judgement, the Court of Appeal has set a new precedent that could provide guidance for property owners across the country looking to let out a spare or second home for commercial leisure purposes.

The material facts of the case were that the property in question was St Audry’s at Melton, an extensive hospital complex. The hospital was closed and in May 1999 approval was granted for the conversion of the property to a number of dwellings including the appellants’ eight bedroomed dwelling. It was not disputed that this was occupied as a residential dwelling by a family between 1999-2007.

However, between purchase in May 2008 and the time the case was heard, it was let by the Appellant, through her company Prestige Holiday Lettings, for short-term holiday lets – achieving £2795 for 7 nights at the height of the season. A full breakdown of the findings of the Inspector for the Secretary of State for Communities and Local Government is contained at this link, which will provide additional context for the Court of Appeal case discussed below if required.

The above referenced case saw the Appellant appeal against an Enforcement Order issued by Suffolk Coastal District Council (Second Respondent) instructing her to desist from using the property as ‘commercial leisure accommodation’ rather than the residential dwelling that it previously was used for. That meant she had to entirely cease and desist with the business she had built up around the property.

The breach of planning control alleged in the notice was technically a change of use without planning permission “from a C3 dwelling, to use as commercial leisure accommodation which does not fall within Class C3(a)-(c), and which therefore constitutes a sui generis use”. “Sui Generis” loosely translates in this context as being an “individual use of its own kind” and thus indicates that the change of use does not fit into any category as yet established through the Town and Country Planning (Use Classes) Order 1987.  The result is that the facts of the case had to be addressed as a unique matter of fact, degree and professional opinion.

Before reaching the Court of Appeal, the Appellant had appealed on the grounds contained in (a), (b), (c) and (f) of section 174(2) of the Town and Country Planning Act 1990 (available here – TCPA 1990). Nevertheless, the Inspector rejected that appeal and the case laid before the Court of Appeal retained only two grounds.

Firstly, that where there is a permitted use as a “dwelling”, that use lawfully includes not only occupation by an individual or family as a permanent home but also the use of the dwelling for holiday or temporary occupation, whether or not that occupation is as a result of a commercial letting. The Appellant submitted that this was the ratio contained in Moore v Secretary of State for the Environment [1998] 2 PLR 65.

Secondly, the Appellant refuted the description in the notice of the property as ‘Commercial Leisure Accommodation’, branding it as neither accurate nor an adequate description of what was actually taking place in the property. The Appellant’s representative submitted that, in view of the severity of the notice (potentially resulting in criminal penalties) it was essential for the Appellant to receive an accurate description so that she could follow through appropriately.

In essence here, they sought to avoid the eventuality of closing the business entirely, as indicated by the notice, under the authority of the Inspector’s own acknowledgement that using the property for some forms of “leisure accommodation” may not amount to a material change of use.

In brief, the result was that the appeal was entirely rejected on both grounds. The Inspector had adopted the correct approach in ascertaining whether change of use had occurred: he had carefully examined the characteristics of the lettings in the present case and concluded that, as a matter of fact and degree, they were a material change of use from the permitted use as a dwelling- house. On the second point, there was simply no other obvious alternative that would satisfy the planning breach without complete closure of the business operation; nor was one put forward by the Appellant.

For the purposes of this brief article, there are two particularly interesting points made in the discussion by Sullivan LJ:

–          Having regard to the definitions of a ‘dwelling’ in the Town and Country Planning (Use Classes) Order 1987 (as amended); it was found with the guidance of the findings in Blackpool Borough Council v Secretary of State for the Environment (1980) – an authority used in this case – that the fact that the property here had been let to large groups who came together because of ‘shared interests’ was a significant factor in the decision to uphold the change of use. Whereas in Blackpool the occupants had been preformed groups akin to a single-household, in this case they were frequently stag-party groups, yoga classes etc.

–          A substantial amount of Sullivan LJ’s discussion of this case actually rested on the case put forward by the Appellant, and how that case was, in the opinion of the judges, incorrectly directed. In particular, the appeal to the Court of Appeal was brought forward on ground (b) (TCPA 1990), which had already been refuted by the Inspector – a decision which the Court of Appeal agreed with. The point should actually have been made in ground (f), whereby the Appellant could seek to modify the Enforcement Notice and reduce its severity. Appealing on ground (b), attempting to argue that no breach had ever occurred, was never likely to have succeeded, but suggesting an amendment to the Enforcement Notice that would save at least part of the business, may have.

Ostensibly, it has been made clear by Sullivan LJ in this instance that all such matters require careful consideration of the particular differentiating material facts and are thus a matter of fact, degree and common sense. The additional status of this issue as ‘Sui Generis’ makes it difficult for the litigation to carry a strong precedent forward.

Nevertheless, it is de rigueur that, as we approach the holiday season, many thousands of holiday properties will be being used for commercial holiday and leisure letting purposes. Although there is certainly some substantial scope for this, all engaging in such activities, particularly to non-family groups, should be very careful regarding their planning position and take the advice of a qualified professional where there is any doubt.

Not doing so could result in costly litigation and a substantial and disruptive loss of income.

A full qualified, local Chartered Surveyor can be accessed via this link:

www.PropertySurveying.co.uk

Comment on this article