Laura Severn, Director at LMP Law, fills us in on the newly permitted development rights for purpose-built blocks of flats.
Flat living is nothing new. Leasehold law goes back centuries. Services charges and ground rent, well they are just part and parcel of the block management lease agreement.
As lawyers, we always keep on top of legislation and changes in residential (as well as commercial) law in a fast moving industry.
It’s no secret that the UK, and especially London, is suffering a severe shortage of housing, and of course supply and demand has been hit by Covid 19 (and let’s not forget Brexit!), so up pops the latest trend for extra housing….Airspace Developments. Think purpose built blocks of flats that are being extended up two storeys.
What is an airspace development?
From 1st August 2020 upward extensions of two additional storeys on a detached block of purpose-built flats will be given newly permitted development rights (PDR).
What does this mean? Well, it enables property owners or freeholders to go ahead with building upward extensions without the need for planning permission. But wait! There’s always a caveat isn’t there?
Does the thought of being an existing leaseholder of a potential airspace development fill you with excitement or dread?
You know there are so many practicalities to look out for if you are the freeholder or seller of the roof space, example – do you even own the roof?! There are often third parties that have rights over buildings so checking on the Title is extremely important. There could well be restrictive covenants limiting the development of the airspace, and we all know leases are complicated, especially when third parties may have a lease on the building too. As an example, any of these utility companies might have a lease on the building owing to:
- Lift Shafts
- Light wells
- Rooftop drainage
- Telecommunication masts
- Aerials and satellite dishes
But one of THE most important roof questions one needs to ask is…do the existing tenants use the roof space? Is it part of their lease? Because if they do….it’s going to be much more convoluted!
Flat Owners and Leaseholders
The Leaseholder and the Statutory Notice Procedure
If you live currently in a block of flats described above and want to know about your rights, then we would say that your building is probably subject to legislation saying that the owners of the long leases of the flats will need to be offered the “right of refusal” of this lease……and this has to happen before the airspace is granted.
What’s the process of an existing tenants’ right of refusal? First of all, notices are served on all ‘qualifying’ flat owners notifying them of the main terms of the proposed lease, together with the premium. (Qualifying just means the flat owners who qualify under the long lease term).
What’s in the notice?
The notice confirms that a majority of the flat owners have the right to purchase the airspace lease as a collective. They must, themselves, serve an acceptance notice within a statutory two-month period. If they go past this time limit, the airspace lease can be granted (in line with the terms of the offer, and before the next 12 months is up).
Statutory limits are really important to adhere to overall for several reasons, but it’s something that can really throw a spanner in the works. Having legal expertise in this area is very important.
Services Charges
Firstly, service charges will NOT be used as a means to raise revenue for the upwards build.
Post build, we can see how existing tenants might be concerned that the services charges could rise owing to a larger area to service- ironically however, it’s the roof repairs that are often the biggest part of service charge requirements with Major Works having to kick in (as repair costs can run into tens of thousands of pounds). Airspace developments would take this huge cost away as the new builds would need a new roof and they will be covered by (at least) a 10 or 20 year guarantee! So service charges are deemed to decrease if anything.
Think of your existing building– does it need a lick of paint? Better insulation? An upgrade on security systems? Many of the privately owned builds could potentially have an agreement whereby the developer and the freeholder agree that communal areas (and possibly the infrastructure), will have upgrades at no extra cost to the leaseholders or tenants, which in turn could possibly decrease the service charges also.
Wrapping it up
In 2019 Apex Airspace received nearly £20m of funding from the Mayor of London and Homes England, so London living and urban resi living as a whole, has been given a push with local councils in talks with developers.
With no permission required from 1st August, airspace developments are going to be on the rise (excuse the pun). Yes, there are going to be stunning penthouses, but let’s not forget that local authorities across the UK’s over populated cities are sitting on top of valuable airspace capacity.
Rooftop developments could be an extremely sound investment for councils as they could maximise their assets, increase the value of their buildings, whilst offering affordable homes.
Laura Severn is a Director at LMP Law, specialist lawyers with a keen focus on the residential property industry. Find out more.
