Do I hold sufficient interests to build on the roof?
Before starting on any development project, a careful check of the ownership of the property and any relevant covenants and rights is required.
Who owns the airspace?
The first thing you must check is whether your ownership of the roof of a building and the airspace above it is sufficient to allow you to develop. If you only hold or will acquire a leasehold interest, the lease will need to be checked as, although relatively unusual, the landlord might have excluded airspace from the demise, or limited its height (allowing the landlord to capitalise on the tenant’s later development plans).
What other interests may exist?
It should be confirmed whether there are any other interests that may impact development, such as a lease of common parts, or a roof terrace which will be affected. There may also be telecoms equipment or masts on the roof which may need to relocated. This can only be done within the strict confines of the Electronic Communications Code 2017. Specialist legal advice should be obtained if any such equipment is identified as this could prove to be a challenge to redevelopment.
What about restrictive covenants?
Land is sometimes subject to covenants restricting the height of a building or the number of storeys or units. Title (freehold and leasehold) should therefore be investigated thoroughly and the possibility of obtaining indemnity insurance in respect of any such covenants considered. Acquiring an airspace lease If you intend to acquire an airspace lease, where an existing building is let to residential occupiers, the grant of such a lease could be a disposal under the Landlord and Tenant Act 1987. This was established in the case of Darmouth Court Blackheath v Berisworth Limited  EWHC 350. If so, the landowner may have to offer the right of first refusal to acquire the airspace lease to existing residents in the building.
The 1987 Act prescribes a process of serving notices on existing flat owners and a two month wait to see if the owners decide to accept the offer to take the airspace lease. The landowner is prohibited from disposing until this period expires. There are criminal and civil sanctions for failing to comply with the 1987 Act so it cannot be ignored. If a ‘requisite majority’ of tenants accept the offer to buy the airspace, the landowner must sell to the purchaser nominated by the tenants instead. The existing lease structure will determine whether the 1987 Act applies so legal advice should be sought on this issue at the outset.
Existing leaseholders could also have rights to acquire the freehold of a building by collective enfranchisement. Development value is taken into account when calculating the price payable by tenants exercising their collective enfranchisement rights. But this process could also mean the potential developer cannot proceed unless it negotiates terms with the existing tenants as the new freeholder.
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