Building plots in the sky!
The United Kingdom has seen significant investment in airspace development following the implementation of planning rules by Ministers in 2020. This move has led to freeholders capitalizing on "building plots in the sky," with more developers embracing rooftop extension development rights. These rights permit the construction of up to two additional storeys on commercial and residential blocks without requiring full planning permission.
As a result of the new rules, the prevalence of "air-space deals" has surged by up to 60%, as reported by experts. The prohibition of ground rent collection on new builds has pushed developers to explore alternative avenues for maximizing profits. Daniel Minsky, a property consultant at Estate Office in north London, stated that the new legislation has rendered new ground rents worthless, presenting freeholders with an opportunity to leverage their assets to the fullest.
Initially introduced to address the housing crisis, the relaxation of planning regulations has the potential to add around 41,000 new homes on rooftops in London alone, as per research conducted by Knight Frank and Fruition Properties. However, a more conservative estimate from the government's impact assessment, provided by the Leasehold Knowledge Partnership charity, suggests the rules will result in the construction of 8,120 new homes over the next decade.
This surge in airspace development has given rise to specialized companies entering the market, such as Apex Airspace, Click Above, Fruition Properties, and Upspace. These companies, in collaboration, have established the Association of Rooftop and Airspace Development, with the aim of introducing a code of conduct to ensure professionalism within the sector.
Despite the potential benefits, some leaseholders have expressed concerns over living beneath upward extensions, fearing a potential loss in property value and the compromise of their home's structural integrity. For instance, Simon Collins, a resident of Grange Court near Bristol, mentioned the difficulty of objecting on the grounds that the building might become unstable.
Leaseholders do have the option to buy the freehold to halt planned works, but this can often be financially challenging. For instance, residents of Grange Court were quoted £16,270 to purchase the freehold in 2020 to prevent the works, but the owner countered with a significantly higher offer of £2.5 million just two months later.