As viable development land remains in short supply, it is unsurprising that developers are looking for ways to increase density within existing sites. While we have previously commented on the difficulties of building upwards into airspace (see update), the recent High Court decision in Gorst v. Knight  EWHC 613 (Ch) highlights some of the legal difficulties of digging down to create additional basement space below an existing building.
In Gorst v Knight the High Court held that the long lease of a maisonette did not demise the subsoil and consequently the tenant had no right to excavate the basement area to create additional living space.
The case concerned an appeal by the tenant of a ground floor and basement maisonette (Flat 1) against a ruling that the demise of their long lease (the Lease) did not extend to the subsoil beneath the premises.
The Lease defined the premises as:
"maisonette shown edged red on the plan annexed hereto and known as Flat 1… being on the ground floor of the building edged blue on the plan (the Building)… and generally including all parts of the building… in the case of a lower maisonette below the line dividing equally the joists between the ground and first floor".
There was also an interpretation provision which confirmed that "maisonette" included reference to the foundations and the void or cellar below the ground floor.
Since the cellar was only five feet high, the tenant applied for and obtained planning permission to dig into the subsoil to increase the depth by another four feet to create a useable living space. The question arose as to who had the right to the subsoil.
If the subsoil had been demised to the tenant pursuant to the Lease then the tenant would have the right to excavate subject to the landlord's consent to alter. Such consent could not be unreasonably withheld by virtue of the Landlord and Tenant Act 1927.
However, if the landlord had not demised the subsoil then the tenant would have no right to excavate and any such excavation would, in the absence of the landlord's consent, amount to a trespass. It would be possible to seek the landlord's consent for the work but such consent would not be governed by any requirement on the landlord to act reasonably and would instead be a matter of negotiation between the parties.
After considering the case law on both upward and downward development, the Court made the following observations:
- there is a legal presumption that the owner of land owns not only the surface of the land but also the airspace above and the subsoil below it. This presumption applies more readily to freehold interests than to leasehold. Having applied the presumption in this case, the Court held that the landlord's freehold interest included the subsoil meaning the landlord had the ability to demise the subsoil to the tenant;
- when considering leasehold interests it is helpful to consider whether the drafting refers to horizontal or vertical divisions of the land. Where a property is demised vertically (say a garage or a particular numbered terraced house) it is more likely that the demise will be seen to be vertical and include the airspace and subsoil;
- where the drafting refers to horizontal splits (for example, that the demise comprises the first and second floors of a building) there is a line of cases indicating that where the demise includes the roof, it is also likely to include some of the airspace above. However, those cases do not amount to a presumption that a tenant to whom a roof has been let always gets a demise of the airspace above it, particularly where there are multiple interests in the building; and
- there are differences between subsoil cases and airspace cases because unlike roofs:
- subsoil is key to the stability of the whole building - if the foundations become unstable the whole building is threatened;
- access to the subsoil is more difficult and will generally involve going through the lowest demise in the building; and
- the subsoil is not visible and open to the elements in the same way a roof is exposed. This means that a problem will not be easily noticed at an early stage.
Consequently, the Court was reluctant to apply the authorities concerning roofs and airspace to subsoil without further consideration.
The Court concluded that the issue turned on the interpretation of the Lease. The Court held that on its true construction the Lease did not demise the subsoil to the tenant. The following factors influenced the decision:
- the definition of the premises (set out above) made reference to the Building. The Building was a reference to the physical structure on the site and did not include the subsoil. Consequently, although there was an interpretation provision adding the cellar to the demise, that was not sufficient to include the adjacent subsoil within that demise;
- although the foundations had been demised to the tenant together with an obligation to keep in repair, the landlord had a right of entry to keep them in repair if required. Accordingly, the Court felt that in substance the landlord had retained control of the foundations; and
- the tenant's rights in the Lease included rights of services through neighbouring or adjoining landlord's property which the Court said would include the subsoil if the demise did not. The landlord reservation of rights to pass services under the demise also gave weight to the landlord's argument that there must be a lower limit to the demise.
While each lease will turn upon its own drafting and factual matrix, the following points are worth noting:
- when dealing with new leases, especially ones divided horizontally, it is important to state precisely what is being demised to avoid any future uncertainty;
- when reviewing existing leases, you need to consider the exact wording of the demise. This will need to be considered alongside the other lease provisions including the rights granted or reserved (and particularly whether they refer to items under or over the premises), who is maintaining or responsible for the foundations and the wording on alterations; and
- the Court was keen to draw a distinction between airspace cases and subsoil cases. This means that useful wording from airspace cases may not assist a tenant in a subsoil case and that these two areas could end up going in different directions.
On a wider note, the decision shows that even though the courts are aware that where living space is at a premium it may be a reasonable use of resources to dig down a few feet to create extra living space, they will only allow this where a tenant has the necessary legal rights to do so.