Tan & Anor v Sitkowski

Premises originally let for mixed business and residential use are not “let as a separate dwelling” within section 1 of the Rent Act 1977. A tenant cannot acquire the Act’s protection merely by unilaterally ending the business use.

The tenancy may subsequently acquire a residential character if the landlord affirmatively assents to the change of use. Knowledge of the change and continued acceptance of rent are ordinarily insufficient. Receipt of rent through Housing Benefit does not establish assent because benefit may be paid for mixed-use premises.

The appellant occupied a shop with residential accommodation above under a 1976 tenancy granted by the Greater London Council. The parties contemplated that he would conduct his electrical business downstairs and live with his family upstairs. He ceased trading in 1989 but remained in residential occupation.

After the respondents acquired the freehold, they served notices terminating the contractual tenancy. His Honour Judge Knight QC held that the appellant did not become a statutory tenant under the Rent Act 1977. The central issues were whether ending the business use brought the tenancy within that Act and whether the landlords had affirmatively assented to a change in the character of the letting.

1. Appeal dismissed. Permission to appeal was granted on the principal issue, but the premises had not been “let as a separate dwelling” within section 1 of the Rent Act 1977. A tenancy granted for mixed business and residential use cannot enter the residential statutory regime merely because the tenant unilaterally stops conducting business.
2. The purpose of a letting is determined from the tenancy agreement construed in its context. Although the user covenant appeared literally to permit only the specified electrical business, the premises were adapted for a shop below and a home above. They had been offered and occupied on that understood basis. The covenant therefore regulated only the ground-floor business use and did not prohibit residence upstairs.
3. The Court followed the central rule represented by Pulleng, Wagle and Webb. The post-1965 statutory scheme treated mixed-use premises as subject to the Landlord and Tenant Act 1954, rather than the residential Rent Acts. It would also be anomalous and unfair if a tenant could obtain the substantially greater protection of the Rent Act 1977 by closing the business unilaterally. Although parts of the earlier reasoning were flawed, the decisions had a rational statutory and practical foundation and had stood for many years. They should not be overruled consistently with the Court of Appeal’s rules of precedent.
4. A mixed-use tenancy may later acquire the character of a letting as a separate dwelling where the landlord affirmatively assents to the change. Mere knowledge of residential use and acceptance of rent do not ordinarily establish such assent. Fourteen years of rent acceptance did not compel that inference, particularly where the landlords lacked knowledge for much of the period.
5. Receipt of rent through Housing Benefit did not alter the conclusion. Paragraph 10(4) of the Housing Benefit (General) Regulations 1987 permitted benefit to be paid for mixed business and residential premises. Permission was refused on that subsidiary point.

1. Court of Appeal (Civil Division): Permission to appeal was granted on whether the premises were originally let as a separate dwelling, but the appeal was dismissed. Permission was refused on the contention that the tenancy’s character had subsequently changed.
2. Central London County Court: His Honour Judge Knight QC held that, following expiry of the notice to quit, the appellant was not a statutory tenant under the Rent Act 1977.
3. Permission proceedings: Chadwick LJ refused permission on the other issues but left the statutory-tenancy issue open for further consideration.