Shouting from the rooftops

12th February 2019

Find out why reaching for the sky is not that far fetched, in Mani Khiroya's latest opinion piece in Planning in London.

As the capital continues to face a chronic housing shortage, over the past few years we have been subject to a plethora of suggestions to help increase housing delivery. From expediting the disposal of public land, to micro apartments, modular housing or Sadiq Khan’s recent £10m housing capacity fund, there is no shortage of ideas on the table.

Elsewhere, many argue that London needs to ‘look up’ in regards to delivering more tall buildings, drawing on similarly dense cities like Hong Kong and New York for inspiration. According to a Knight Frank report, London has the potential to support up to 40,000 new homes through ‘air rights’ development. Air rights refer to the air space above an existing property, whether commercial, mixed use or residential, which can be acquired and used to further develop it.

This is an innovative way of unlocking potential to deliver much needed housing in dense areas. Tesco already has its wheels in motion, by planning to sell off the air rights above its superstores and car parks, having identified 20 sites across London capable of providing around 9,000 units. Elsewhere, Capital & Regional has secured permission to build 460 homes on top of Walthamstow mall.

How does it work?

In most instances the freeholder (whether single entity or collection of leaseholders) and developer will first enter into an option agreement. It is vital that the stakeholders take a collaborative approach when working together, with the developer taking the time to understand the needs or the parties involved to ensure the delivery of an appropriate solution.
Having the option agreement in place, the developer then has the time to achieve planning permission for the proposed solution, whether a single or several dwellings before formally acquiring the air rights. As well as a substantial payment to the freeholder for rights, the process also usually involves negotiating improvements to the building’s exterior and interior, such as an enhanced façade, better insulation, updated common areas or even a pro rata contribution to service charge costs. In turn this can have a significant uplift on the building’s overall value, while also benefiting the existing residents who would have otherwise been unable to afford such improvements.

 

The View, Putney
The View, Putney

At a recent project on Upper Richmond Road in Putney, where we created four new  apartments on top of an existing residential block, the leaseholders benefitted from new cycle and bin storage, post boxes and a new audio-visual entry system to create an integrated facility for the new and existing leaseholders. Finally, the existing residents will benefit in the longer term from the sharing of the building costs with these additional leaseholders, thereby reducing their annual service charge by 25%. As you can see, this provides a win-win approach for all parties.

However, it’s not just the big players that can get involved. Freeholders of more modest buildings, whether they are pubs, offices or residential blocks, are increasingly entering into partnerships with smaller developers to unlock their own air rights. In fact, this type of development is often better suited to such developers who are innovative and agile with significant expertise including in-depth knowledge of planning, legal matters and construction.

On that note, improved technology is proving paramount to the rise of air rights, with modern construction methods and materials facilitating faster and more cost-efficient builds, resulting in less disruption to those within the building be it a retailer or resident.

This was the case at our project with Young’s Brewery in West London; we were able to develop the air rights above an existing pub with the business able to remain fully operational during the construction period.

So, what next for air rights?

The good news is that the policy makers are starting to embrace this potential. The revised national planning policy framework document gives support in principle to extensions above existing residential and commercial premises for new homes, stating that development of up to two additional storeys would be looked upon favourably as long as it is in keeping with the surrounding area. Sajid Javid has commented that the move would ‘encourage developers to be more innovative and look at opportunities to build upwards where possible delivering the homes the country needs.”

More recently, the Budget announce that consultation has opened on extending permitted development rights for rooftops extensions. So, what are we waiting for? From my perspective, it looks as if the only way is up.

 

 

More on Air Rights