A Complete Guide to Your Airspace Permitted Development Rights

The UK housing market has been in crisis for some time, with no signs of slowing down. The UK government estimates a need of around 345,000 new homes per year but in 2019/20 housing stock only increased by 244,000 homes. One of the main limitations, as identified by the government itself, is that the planning system creates failures in the housebuilding process - especially in areas where the need is severe.

One of the main issues within planning is that of land - finding the right land that is suitable for development at a reasonable price is difficult - especially when you consider a desire to live in said area. While it is theoretically possible to build in rural areas, the need for housing is typically in cities and high population areas where land is either unavailable or comes at a high premium. 

How can private developers and landlords increase housing stock in a more affordable way without falling victim to the complexities of the planning process? One solution is that of airspace development, which has been made more achievable since a ruling in 2020 that created new possibilities for permitted development with regards to airspace. 

Airspace developments aren’t what they seem. Despite the ‘airspace’ nomenclature, the term actually applies to the property industry as developers begin to run out of land and instead look to the skies. This presents an opportunity, but one that has to be carefully considered. 

What are airspace developments? 

Airspace developments are those built within your ‘air rights’ in existing buildings - which currently average around two levels up from the existing building. Your ‘air rights’ are the rights of development within unused air above your existing owned property. Airspace development is essentially a subcategory of your air rights that specifically references creating new homes on top of existing buildings.

Airspace development achieved specific permitted development rights in 2020 with a new class of rights applying that allows developers to build up to two additional floors to provide housing without planning permission. 

This need for housing is apparent in London, where land is at an extreme premium and many residential buildings are underutilised in terms of vertical construction. For the right developer, this presents lucrative opportunities. 

How to identify airspace developments

The first thing to consider is whether you currently own the existing building and if air rights apply. Read this guide on our site to help understand the rules. Some property terms do not extend to air rights, so even if you own the freehold you may have to offer them to the leaseholder first. 

Remember that you don’t necessarily need permitted development rights to build vertically - but it does ease the planning process and makes everything more simple and effective. For finance purposes, having permitted development rights apply to your project is a way to help assuage lenders who may be hesitant to get involved. 

Whether you already own the property or have to buy it, you’ll still need to consider its actual physical suitability for airspace development…

Suitability for development

Do not rely solely on standard contractors and inexperienced builders to assess a building’s suitability for vertical construction. You may be better served contracting a skilled property surveyor, architect or contractor with an evidence history in airspace development. They will assess factors such as: 

• Can the building structurally support new development? Will it take the weight etc? 
• Will the new properties have means of access and escape that meet all current regulations? 
• Will the development suit the local area or fall under excess scrutiny from local planning teams? 
• Will new lifts need to be installed? 
• Is there crane access so the development can actually occur?

You’ll also need a legal expert to review the terms of your land arrangement. If you, for example, have a freehold over the building, does it apply to the airspace? In some rare instances, developers have purchased a property and then later realised the air rights above them have already been sold - though this is more common in the US where the buying and selling of air rights is common practice. 

You’ll need to look at the current status of residents near the development - will the development impair their right to natural light or other regulations? Will the construction of your airspace project impact their lives in a negative way? 

Once you have assessed all of these elements, it’s time to make a profit-driven decision: will the income generated from the property make the investment worth it? How long will it be before it becomes profitable? How will rental yields and property prices change over the project’s timeframe? In cities like London, even high upfront costs can be worthwhile thanks to the significant return due to demand. 

Securing permission

Permitted development rights, or PDR, might apply to your property plans if they are no more than two storeys high and are built on top of existing purpose-built residential flats. This is subject to prior approval so you’ll need to comply with all permitted development regulations around minimum room sizes and natural light ingress. These are, according to government guidance No.632, as follows:

• The building must have been built between 1 July 1948 and 5 March 2018 and must be at least three storeys in height above ground level
• If a building is staggered, it is the higher part that must be built on to prevent them from being ‘filled in’. 
• The new building’s floor to ceiling height can’t exceed three metres or be more than the ceiling height of any of the existing storeys.
• New units must be made into flats and be freestanding
• The roof height of the existing building can’t be any more than 7 meters higher than the highest part of the existing roof
• Once finished, it cannot be more than 30 meters in height (not including plant) and can’t have any external support structure.

Despite the PDR rulings, some developments still hit issues such as local objections - so engage with your planning officers early on to assess the level of complexity it’s going to take to get started. The earlier you can do this, the better. 

Finding a contractor

It’s always better to find a contractor or development partner that understands the ins and outs of airspace development. It’s never as simple as placing a building on top of another - it’s a process that can significantly impact the original building and its structural properties. Developers who understand this bring a number of benefits such as :

1. Lender confidence: when you’re securing finance for the project, lenders are more favourable if the contractor has demonstrable experience. Some lenders may even opt to only issue funding if you agree to use their own suggested contractors/builders. 
2. Legal knowledge: contractors who know airspace development will already know the majority of the legal and planning requirements in place. That will help you navigate leases and titles etc as well as check their design is a lawful, compliant build. 
3. Design & purpose: contractors will either have an in-house architect or use one they know to design the property as required. They will be able to advise you on the suitability of the development, the aesthetic requirements in place and even how to maximise investment if you’d like to create a rental property rather than a home to sell once and move on. This will include updates to the existing infrastructure of the building like lifts, communal areas, parking and roofing - all things that will impact existing building tenants and future ones in the new airspace portion. 

Minimising disruption 

When you’re developing in a busy city centre area, as is common in airspace development, certain considerations have to be taken into account. Using a skilled contractor will help with this as they’ll be able to advise you on the logistics and planning involved - but as an idea, you’ll need to consider everything from how to get a crane near the development, how to mitigate disruption to traffic and how to safeguard pedestrians. You’ll also need to think of more general planning issues like disrupting people who are working from home with noise and dust etc. 

Before you actually commence with the build, you’ll also need to talk to existing leaseholders in your building. They may have reservations about new buildings atop their homes which can lead to hassle and even legal challenges if you impair their access to light. 

To help mitigate their issues, it might be worth upgrading the entire building as part of the process to encourage the current leaseholders and show them you are committed to the entire building rather than the ‘new’ part. This might mean putting finance aside for new communal areas or lift upgrades etc. These can increase the value of the existing properties, which is a fact owners in the building may be pleased to learn. 

Any top-level flat owners may be harder to ‘get on board’ as they’ll likely be facing a drop in value as their flat goes from an attractive top-floor option to something sat below your new development - so you’ll need to take this into account and think of how to assure them that the overall impact to communal areas and amenities etc will be worth it. Some contractors can help with this by offering attractive vertical building designs that do away with the notion of an existing owner being stuck under a new ‘bolted-on’ building. 

Finally, residents benefit from what is essentially a free roof upgrade in a world where roof repairs and updates are the most costly part of ownership. 

If noise and dust are a concern, building off-site can help reduce the disruption of the project. It isn’t always viable, but when it is you can often complete nearly the entirety of the new building and then transport it to the site in pre-built sections. 

A full development project can take anywhere from six months to a year, but the planning process should be started in advance as it’s often the lengthiest part of the entire thing. Remember: even if PDR applies to your building it’s worth consulting with a planning professional to ensure you’re meeting all regulatory expectations. For example, ‘right to light’ is not a planning consideration but can spell disaster for your project if you don’t understand how it works. 

Financing the development

Like any property development project, finances are critical in making it happen. While you can offer some capital towards the project, lenders typically lend based on a final expectation over the property value or rental yields. 

In airspace development, a lender must also assess the additional factors such as residential complaints, planning permissions and local disruption before making a decision. That’s why it’s critical that you already have everything planned and hopefully, permitted - which gives a lender more confidence and means they’re more likely to lend. 

Remember, you can raise finance even if you have low perceived capital depending on your assets. Some lenders will, for example, lend based on your buy-to-let portfolio rather than your capital stack. 

Regardless of what approach you take, do it with a finance broker on your side. We’re experts in property development and have extensive experience working with airspace developments too - so we know how to get your application up to the lender’s expectations and ensure you have the best chance of securing the finance you need. Better still, we browse the whole market to find finance options that may be even better than you’d originally expected with rates that can offer a lasting return on investment (ROI). 

Completing the project

Most developers will look to sell their development and move on, or rent the properties out. Whichever route you take should be guided by your accountant and any business planning you’ve done, as some areas may have more lucrative rental yields compared to overall purchase prices. 

Then again, you may just want the simplicity of selling and moving on rather than managing rent. However, it may be worth approaching a lettings agent to manage the property for you if the rental yield forecast would deliver longer-lasting financial gains than a one-off sale. Your lender will have likely helped steer this decision as they are the first part of your capital stack and want to recoup their investment in the most efficient way. 

Airspace development finance

Don’t go it alone when you’re looking to develop your existing properties to take advantage of airspace. Work with Rangewell so you’ve got a team on your side that not only understands the property finance aspect of the project but can help you maximise your overall project by finding the right lenders, advisors and even contractors if needed. 

Make the most of your existing air rights. Contact us today for a free consultation to talk through your project and see if there’s an opportunity for us to help.