Airspace Development – What the change in Planning Means to Developers

Posted by L+ Architects on 21st July 2021 -

On the 01 August 2020, HM Government introduced new rules allowing apartment blocks to be extended upwards by up to two storeys (airspace development) to create new homes without the need for planning permission.

With the ability to develop airspace without the need for planning permission, these new rules could present many opportunities for property owners and developers.

This blog looks at some of the important considerations when thinking about exploiting this opportunity:

We talked to Pablo Lambrechts, Principal Architect of L+ Architects about what these changes could mean for owners/freeholders and the design and legal implications:

What is an Airspace Development?

An Airspace Development is building one or two storeys on top of an existing apartment block of no more than 3 metres.

What are the associated problems of Airspace Development?

Leaseholders have the right to refuse purchase: the new change in planning is not pertinent to Conservation areas or Green Belts; tenants in the blocks do not want scaffolding for a lengthy period, there are services in the roof that need relocation and

Who can consider an Airspace Development?

Airspace development is not simply the domain of institutional property owners, as freehold owners of multi-occupied properties (whether owners of a building subject to long leases, or indeed residents in blocks of flats with shared ownership) are also increasingly finding ways to exploit value in their properties. Many developers and block owners will be looking at this new opportunity to convert unused airspace above existing blocks into something more valuable.

The recent changes are summarised as follows:

• The right is restricted to buildings of 3 storeys or more (height)
• The building must not be extended over 30 m in total height
• The height of the extension cannot surpass 7 m compared to the highest part of the existing roof
• Any new storeys must be individually no more than 3 m in height
• New homes must be apartments
• The right only applies to buildings built after 01 July 1948 and before 5 March 2018
• Excludes buildings in areas of SSSI Site of Specific Scientific Interest
• If in a Conversation area, it would also be prudent to check with the local planning authority
• Development must be subject to prior approval: this looks like a planning application, but you know that many conditions are ticked off

What makes airspace developments different?

For any development, you will need the space (land), services, funding, and then construction.

In airspace developments, however, there are further considerations:

• Design & technical difficulties in building up
• Increased services provision
• Occupier & tenants’ rights: legalities involved such as the right to light, access & party wall matters.
• Due to these considerations, funding can be more challenging

Construction considerations

• A complete feasibility report will be needed to assess the pros and cons of each development
• Structural concerns such as loading capacity
• Need to assess access requirements for the build
• Fire protection (particularly cladding)
• Maintenance
• Acoustics
• Provision of services (internet sustainable technology)
• Look at modern building methods: prefabricated
• Need for access for cranes
• This type of construction is costly and the design & engineered solution to this project will be crucial to the financial success

Services

• The increased capacity will mean additional services
• Could mean separate service capacities or extension to exiting
• Developers must be careful not to exceed any limits for these
• Plant & service equipment that may be in the roof will need to be reallocated elsewhere

Legal issues and practical solutions – existing tenants and their leases

• May be resistance form residents & neighbours due to noise & disruption, car parking and value of their properties
• This could be mitigated by offering to refurbish for instance the exterior and communal areas including lifts and stairs outside of the service charges regime

Not surprisingly, a roof top development scheme may well be met by resistance from resident tenants and neighbouring property owners who will have concerns as to the noise and disruption caused and possible effect on the enjoyment of their property, availability of
amenities such as car parking, and the effect on value.

One of the sweeteners could be the offer of a newly refurbished building exterior and communal areas including lifts and staircases and of course a new roof – all undertaken outside of the service charge regime. Whatever arrangement is arrived at needs to be documented with the party responsible for the maintenance and repair of communal areas, which could be the freeholder, management company or the tenants themselves.

Offering to extend the leases for the existing tenants and even a profit share with the leaseholders are other incentives to leaseholders which a freeholder or developer may be able to offer. Whatever the deal there are legal constraints which need to be understood and
correctly dealt with. In the case of neighbours, as with any development, restrictive covenants, rights of light and party wall legislation need to be taken into account and managed at an early stage.

Checking the leases

• To start from a leaseholder’s perspective that the building owner has a right to develop its building unless there are extremely specific restrictions
• Look at any services found in the roof void also air conditioning, lift machinery & plant, ventilation, chimney shafts & flues, smoke detection systems, aerials & satellites, internet with a view to relocation.

First refusal to tenants

The freeholder must consider Section 4 of the Landlord and Tenant Act 1987 considering selling or leasing. The leaseholders will have the right to first refusal and the lease will have to be offered first to any qualifying tenants on the same terms & price as the developers.

• Failure to comply with the Act is not only a criminal offense but the anti-avoidance provisions mean that if the landlord fails to comply, the leaseholders can compulsorily acquire the lease from the purchaser direct for the price it paid.
• Where the Act applies the qualifying leaseholders need to be given a minimum of two months’ notice prior to any sale which can seriously affect the commercial viability of the development. There are ways of working around the legislation and legal advice can help identify a correct approach, but this is certainly not an issue to ignore.

Collective enfranchisement

• Enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993 effectively allows the leaseholders to force through a sale at any time. Under the legislation they are required to purchase the whole of the building and the cost normally makes it unattractive for leaseholders. The legislation states: ‘interest reasonably necessary for the proper management or maintenance of those common parts’ and this entitlement can therefore often catch roof space.
• The risk to the developer comes if the tenants can argue that the value of the rooftop space is as amenity space rather than potential development space.
• Enfranchisement is another important issue to consider at an early stage to mitigate any risk of losing the block at a price below its value to a developer.