Posted at 15:01h
in Industry News
Article in Telegraph, on 20/02/2017 by
It’s a little known fact that home owners also own the space immediately above their property, and that it’s theirs to sell. Now, as the pressure for urban construction sites intensifies, planners and developers are looking to utilise every available corner of a city for building homes. In London, that now includes rooftops.
Airspace has become a commodity and can be traded in the same way as a physical structure or land. “There’s an estimated £54 billion worth of roof space in London,” says Haroon Bhatti, investment director of London-based development firm Apex Housing Group.
A report that the company produced with architecture and urban planning firm HTA Design calculated that rooftops could provide the space for 180,000 extra homes across London, without even taking into account the amount of space above commercial buildings such as supermarkets and warehouses. In the borough of Camden alone there is the potential for 2,485 extra homes, according to the report.
This emerging method of building could be a boon for bodies trying to build much-needed affordable homes while avoiding huge costs for land, says Bhatti. “If housing associations and local authorities took up the space available to them, it could unlock 60,000 homes.”
Bhatti says that Apex, which works in both private and social housing sectors, has been “banging the drum” about the potential to use roof space for the past two years and is seeing a softening of attitudes from planners.
The company has been talking to 12 councils across the capital, as well as City Hall. “We see this as a whole new market for residential property,” he says. He’s got support in high places, too: the new leader of Westminster Council, Nickie Aiken. She has backed the idea of building in airspace, saying that she will ask ministers to “give us a chance. If it works in Westminster, it will probably work anywhere.”
There are only a few niche developers involved in maximising the use of roof space, with most aiming to build luxury penthouses.
Roofs need to be flat, and have space for an access point to be built in, such as an exterior staircase. The end result tends to be light and airy, often higher up than surrounding structures, and with terraces and views.
The value of the space above a property, be it residential or commercial, will depend on location, size and suitability for development. This includes whether the structure is strong enough for further construction and how many units it can reasonably take. For private developers not every roof works; this kind of construction is so far mainly taking place in central London, where values are high, and so a profit can be made.
Award-winning Swedish firm, First Penthouse (firstpenthouse.com), has developed airspace properties on the flat roofs of historic buildings in Chelsea, Knightsbridge and St John’s Wood. Managing director Patrick Brightman says rooftop development can only really work in locations with high density and high returns. “Building into airspace is more expensive than building at ground level, so the costs can escalate,” he explains.
How do you make a mint from your newly discovered ability to sell your airspace? Costs vary widely, and some developers don’t buy the airspace but cover all the costs of development, from gaining planning consent to final installation of the rooftop properties. In return, they offer the freehold owners a share of profits on the sale of the new apartments. Other firms prefer to buy the airspace outright, then undertake the construction but retain any profit from unit sales.
To minimise disruption to residents and the local community, several developers use pre-made, modular structures that are built off-site and installed almost fully formed. This reduces the need for on-site labour to a few weeks, and has been heavily backed by the Government in last week’s white paper as a way to speed up construction.
Building into airspace needs planning permission, extensive surveys and the consent not just of the freeholder but of the leaseholders in an apartment block.
According to Fyodor Blumin, investment director of niche developer Noel and Partners (noelpartners.co.uk), residents and owners of properties that get planning consent often benefit in a number of ways. “Part of the developer’s obligation is usually to refurbish the building’s exterior and communal areas, such as the lobby, stairways and lifts,” he says. “It’s a way of giving something back to the residents, who will also see an overall uplift in value of their own properties as a result.”
Noel and Partners recently completed two penthouses above an eight-floor building with a roof space of 3,500 sq ft in Victoria. Each property has a modern steel frame and glass walls with views along the Thames towards Westminster. One has been sold and the remaining penthouse is listed with Sotheby’s International Realty for £3.95 million (sothebysrealty.co.uk).
Blumin says he is actively pursuing other sites but finding suitable roof space is difficult, a reminder that this is still on a small scale. “This type of development can only work in certain locations so we need to be selective. Not as many building owners are exploring the opportunity as they could be, but I believe it has the potential to contribute to solving London’s housing issue.”