The UK government updated planning rules in August 2020 for ‘airspace development’ which involves building additional storeys above existing properties, rather than needing to build on sought-after greenbelt land.
This approach has gained huge momentum and excited a lot of property developers, investors and building owners in dense areas such as Paris, New York and London.
Airspace Development Policy Changes and Their Impact
The newly approved rules allow developers to add up to two storeys on certain types of buildings without requiring full planning permission. This includes detached, semi-detached, and terraced homes, as well as blocks of flats.
Example: A three-storey apartment building in London could add two more levels under these regulations, providing additional rental units and increasing the overall property value. This streamlined process reduces bureaucratic delays, making airspace development an attractive option for property owners and investors alike.
The policy is particularly beneficial in urban areas like London, where space for new construction is limited. By utilising airspace, developers can create high-quality housing in prime locations without the need for large land purchases. For landlords, the added rental income from new flats can significantly boost their earnings, while freeholders see an increase in the overall value of their property.
For those property developers looking to build on these opportunities, there is a specific structured finance product for it, known as airspace development finance, which is structured to cover a combination of building, construction and land costs. The finance is structured in stages to allow manageable cash flow.
No Planning Permission Required, But Considerations Necessary
Despite the lack of planning permission requirements, airspace development is not without challenges. Key considerations include noise and disruption during construction, which can impact existing tenants.
Developers must plan carefully to minimise inconvenience, ensuring tenants are well-informed about timelines and processes. If you are working with a property management company in London, they may be able to manage the communication, rent adjustments and even relocation of tenants if necessary.
Utility management is another critical factor. Adding new storeys requires adjustments to water, electricity, and gas systems to ensure the entire building functions efficiently. This often involves upgrading infrastructure, which can be complex and costly. For instance, water pressure must be sufficient to reach the new upper levels, and electrical systems may need rewiring to handle increased demand.
Air quality and pollution also come into play, particularly in urban environments. Developers must ensure that the new units meet health and safety standards, considering ventilation and insulation to protect residents from external pollutants.
The Role of Project Managers in Airspace Development
Given the complexities involved, hiring a property manager or project manager is essential for airspace development. These professionals oversee the construction process, coordinate with contractors, and manage budgets and timelines. They also ensure compliance with building regulations and handle any disputes that arise during the project.
A well-managed project not only reduces stress for property owners but also ensures the new units are completed to a high standard, making them more attractive to prospective tenants. For example, in a central London development, a project manager would ensure the design aligns with local architectural aesthetics, appealing to the high-end rental market.
What Are The Financial and Social Benefits Of Developing Airspace?
The financial benefits of airspace development are clear. In London, where average rental prices for a two-bedroom flat exceed £2,000 per month, adding multiple units to an existing property can provide a substantial income boost. For freeholders, the value of a building with additional storeys increases significantly, making it a lucrative investment.
Socially, this approach addresses the UK’s housing shortage by creating new homes in existing urban areas, reducing urban sprawl. It maximises the use of existing infrastructure and land, aligning with sustainable development goals.
Airspace development represents a practical and profitable solution to the housing crisis, but careful planning, respect for existing tenants, and professional management are key to its success.