You own the freehold to an apartment building in London, and you are approached by the developer with an interesting proposal. They want to buy the unused rooftop space on your building to develop and sell some new flats. Their pitch? We pay you 2 million pounds and we take on all the expense and risk of construction and the building. Sounds great, right? But, what’s that nagging voice in your head saying “this is too good to be true”.
Whilst the developer’s plan is part of a growing trend to build extra floor on top of existing buildings to create new homes (and lines up with the government’s goal to boost housing across the UK), there are a number of risks to consider and actions to implement before agreeing such a sale.
Survey
Adding new floors means increasing the structural load on your building. A structural survey can be commissioned to confirm whether the building can safely support the additional weight.
Where the building has a party wall, you need to consider all notices and works that may be required under the Party Walls Act. You should also check the layout of the current building. For example, can the current lift be extended to service the new floors.
Your surveyor should also consider the implications of the Building Safety Act. Adding new floors may ensure that the building is a “high risk” building, meaning more regulations and controls on the building and any works.
Legal
Consider instructing a lawyer to action the following:
- Review the title to check that you own the airspace (i.e. you have the right to build up) and that there are no restrictive covenants or rights of light which would prevent the airspace being developed. If any such exist, you may be able to obtain an insurance policy to protect against the enforcement of these covenants/ rights (depending on who benefits from the covenants/rights and when the covenants/rights were granted).
- Consider if the proposed works will interfere with the rights of existing tenants and any other third parties. Any such rights would need to be released to avoid future disputes.
- Consider whether the tenants have any statutory rights. Qualifying tenants may have a right of first refusal on any offer to sell the roof and a right to acquire the freehold.
Planning
Since 2020, the construction of two additional storeys in the airspace above a building may fall within “permitted development” (i.e. no planning permission is required). However, there are limitations to this and it is likely that the proposed works would require a separate planning application. It is imperative to take advice from a planning consultant.
Rights of light
Depending on the location of other buildings and the height of your building, the development may affect another person’ right to light. Rights to light can be established if they have been enjoyed uninterrupted for 20 years or more without consent (they don’t need to be registered on your title). A person with such a right could be entitled to damages or even an injunction to prevent your development. A rights of light survey will determine whether such risk exists and an insurance policy may be available to protect you against third party claims.
Engagement with residents
Construction can be disruptive due to noise, scaffolding, and access restrictions, all of which can significantly impact the residents. Therefore, it is crucial to communicate and engage with the residents as soon as possible. Building a rapport with the residents is more likely to minimise objections and legal challenges which could scupper the development.
From experience, it is likely that residents want something in return for giving their support. This could include replacing the lift, repainting the building, upgrading the common parts or a contribution to the sinking fund.
The benefits of the development should clearly be explained. This could include a reduction in service charge an an increase in value to the residents’ flats.
Final thoughts
Any rooftop development brings with it a number of risks. The above items should be given careful attention. Otherwise, the developer’s offer indeed may turn out to be too good to be true!
further information
If you have any questions regarding this blog, please contact James Caswell in our Real Estate & Construction team.
about the author
James joined the Real Estate team as a Legal Director in 2022 having previously worked in-house for several years – notable experience includes: general counsel for a London based residential property investment company; legal counsel for an international apartments/hotels operator; and legal counsel for one of the largest property developers in Australia (based in Sydney). James also brings over 10 years of private practice experience having worked for well known city law firms.
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