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Property development – are existing rights sufficient?

Commercial property expert Magdalene Haywood looks at three potential problems for property developers when attempting to rely on existing rights.

Property developers are in the business of change. A property asset is acquired, altered and then sold at a profit. Adding value is often achieved by changing the use of the land or by physical development.

Many sites rely on rights over neighbouring land (often referred to as easements). The most significant in the context of development being rights relating to access and the supply of services. A developer must establish whether these existing rights will support the proposed development or if additional rights are required. New or enlarged rights often come at a price; a price that should be incorporated into the development appraisal.

Commercial property specialist Magdalene Haywood looks at some of the issues that should be considered early on when assessing the viability of a development scheme.

The law relating to easements can best be described as a dog’s breakfast. The Law Commission recommended wholesale reform in 2011 but, whilst parliament is distracted by the economic crisis and the war on terror, parliamentary time for reforming the law of easements may be a long time coming. Until then vigilance is required as demonstrated by the following three hypothetical examples.

Acquiring additional property

The only means of access to 51 Coronation Street is a right of way over a privately owned track known as Waterloo Road.

Mr Knight, the owner of 51 Coronation Street, buys a building plot next door with the intention of building a new house - 52 Coronation Street. Can Mr Knight use his right over Waterloo Road to access 52 Coronation Street, either directly or by entering 51 Coronation Street and from there passing to 52?

The general rule is that a right that specifically benefits one property cannot benefit another. So in the absence of any other means of access, 52 Coronation Street is landlocked. Whilst there is some creative case law out there attempting to get round this established principle it would be unwise to rely on it to deliver a fully serviced site.

Changing the use of property

An old bakery site had the benefit of a drainage right over neighbouring land. The bakery was demolished and two new houses were built in its place. In 2004 the Court of Appeal had to decide whether the new development could use the existing drainage right. The court held that where there is a change of use an existing right could continue to benefit the development provided that:

The test set out by the Court of Appeal is a useful pointer but whilst the second part can be established by a consultant’s report on predicted future usage, the first part is highly subjective. Whether a ‘radical’ change is likely to result from the new use may be a difficult one to call and to get over the line, both parts of the test must be satisfied.

Intensification of use

Developing a site by increasing its density raises its own set of issues. For example, where a house is demolished and replaced with 20 luxury apartments would an existing right of way for “residential” purposes support the new more intensive use of the site?

The use has remained the same and the area of land served by the right has not been enlarged. However, the burden over the land subject to the right of way will inevitably increase unless the original owners of the house had 20 cars which they used on a daily basis.

The answer appears to be that unless the increase in usage amounts to an actionable nuisance or represents a ‘radical’ change in the character of the site, the owner of the burdened land will have to put up with the extra traffic.

These are just three of the many issues that should be considered at the earliest stage of site assembly to ensure that the completed development can be properly accessed and serviced. Negotiating with neighbouring landowners for any additional rights that are necessary or considering indemnity insurance options are better dealt with sooner rather than later.

Certainly significant sums should not be invested until it is clear that the new development has a sufficiency of rights. The possibility of an adjacent landowner ransoming an intended development is best avoided.

This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.

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