Property

They ain’t making any more of it!

The Royal Borough of Kensington and Chelsea recently failed in its attempt to stem the growth in basement extensions to which some of its residents take objection. It claimed that the “permitted development” rules, which allow certain home extensions without the need for a formal planning application or permission, did not apply to the excavation of new basements because the home extension rule does not apply “where the enlarged part of the dwelling-house would have more than one storey”.

The Judge came to the conclusion that the new basement in question didn’t, itself, have two storeys and that development of single storey basements under multi-storey houses was permitted development, provided all the other conditions about distance from boundaries etc. were satisfied.

Basement extensions, like skyscrapers, are attempts to mitigate the economic effects of Mark Twain’s dictum: “Buy land: they ain’t making any more of it.”

In a landlord and tenant context we are quite familiar with excluding the air-space above the current roof of the demised premises. There are two reasons why landlords might want to do this sometimes.

  1. If the tenant decides it’s profitable to re-develop the air-space and can get all the necessary permissions, the landlord has the best of all ransoms. It owns the air-space in question.
  2. Part 1 of the Landlord and Tenant Act 1927 confers on business tenants a right to compensation, when quitting the premises, for improvements made by them. Compensation can only be claimed if the tenant gave the landlord three months’ formal notice of its intention to carry out the improvement before starting work. In those three months, the landlord can elect to carry out the works itself in return for a reasonable increase in rent. Not surprisingly section 9 of the 1927 Act prevents contracting out. The result is that there’s only one way a landlord can prevent a really determined business tenant from getting the improvement it seeks. The tenant’s rights under Part 1 of the 1927 Act apply to an improvement to the demised premises. If the air-space wasn’t demised to the tenant at the outset, the tenant can’t force an “improvement” of it on the unwilling landlord. Moreover the landlord is not at risk of having to pay compensation at the end of the term.

Perhaps we shall start to see leases routinely drafted to exclude not only the air-space above and beside the building, but also the soil below it. After all, this already happens in (admittedly uncommon) cases where tenants seek to avoid liability to remediate ground contamination.