Selling air might seem like something straight out of a snake oil salesperson’s playbook, but the airspace above your property could have more value than you realise.
For example, in 2019, the Golden Age Group bought the air rights above The Glen shopping centre in Melbourne. This vertical deal cleared the path for the luxury Sky Garden apartment complex which was completed in late 2020.
Then there’s the story of Michael Yarra. The property developer made headlines in 2010 when he bought three top-floor apartments next to his own high-rise complex in South Yarra to guarantee unobstructed views for years to come.
Sydney council also got in on the action in 2019, selling the air rights above the 200-year-old heritage-listed Hyde Park Barracks to a consortium of developers for $20 million. While the developers can’t build above the building itself, the purchase allows them to ‘bank’ the space to expand development elsewhere.
So what are air rights and how can you capitalise on yours?
What are air rights?
In property law, the concept of air rights dates back to a 13th-century legal maxim, which held “whoever owns the soil, it is theirs up to the heavens and down to hell”.
While poetic, this definition is not true these days thanks to air travel. Instead, in common law, your air rights extend as far as ‘such height as is necessary for the ordinary use and enjoyment of his land and the structures upon it’.
Typically, when you buy land or property, you get the air rights included in the deal (though a notable exception to this is a plan of subdivision that includes limitations on the upper or lower boundaries of a property). This means you can develop, or veto the development of, the air above your land within reason.
In an air rights transaction, you sell this right on. As such, air rights are sometimes known as transferable development rights.
How to capitalise on your air rights
Melbourne is a fantastic city to call home. So it’s no wonder its population is on track to outstrip Sydney’s by 2026, according to a recent Centre for Population report.
But all those people have to live somewhere, and the amount of available development space is shrinking. As such, air rights are becoming increasingly valuable to developers.
There are two main reasons they want to buy them:
- To protect a development’s valuable views and/or its access to light and air (as in the Yarra deal)
- To bank the space and expand their stock of inner-city developable bank (as in the Sydney example)
An air rights transaction is similar to a land-based one, with stamp duty and other applicable taxes still payable on the deal.
That said, it’s a highly-specialised field of property law, so you need to get the right law firm on board if you’re considering selling, purchasing or developing air rights.
Freya Southwell is a senior property and development lawyer at Sutton Laurence King Lawyers. Get the expert advice you need by speaking with Sutton Laurence King Lawyers. Call us on 03 9070 9810 or email us at .