Air Rights FAQ

In property law, depending on what the title and Plan of Subdivision provides, a landowner may own both the physical land described on the title as well as the air rights above the physical land.

This principle is based on the Latin maxim “cujus est solum ejus est usque ad colum et ad inferos,” which loosely translates to “whoever’s is the soil, it is theirs all the way to Heaven and all the way to hell.”
A notable exception to this is a Plan of Subdivision which includes limitations on the upper (or lower) boundaries of a property, for example, as shown in strata Plans of Subdivisions for apartments or units.

For the most part, owners maintain ownership of both the physical land and the air rights above it and do not sever the connection between the two. However, in various circumstances, this connection is severed by a sale of the air rights.

If a landowner owns the air rights above their physical land, how they can utilise their air rights may be subject to practical considerations, including but not limited to:

1. Any limitations noted on the Plan of Subdivision. These may include on the upper (or lower) boundaries, for example, as shown in strata Plans of Subdivisions for apartments or units; and
2. Planning regulations, zoning overlays and other planning requirements. These may prohibit or place restrictions on the development of the air rights.

It is important to obtain legal advice on the above before selling, acquiring or developing air rights.

Examples of air rights uses include:
- Selling all or part of the air rights over your property;
- Acquiring an adjoining property’s air rights to preserve a developments view and/or its access to light and air;
- Building into an adjoining property’s air rights by way of cantilever to enhance a developments design and/or the development yield;
- Building into the air rights of a residential, commercial or mixed use property by adding additional level(s) to capitalise on the property’s location and possibly increase its value;
- Leasing air rights;
- Selling a rooftop lot of an apartment building, where air rights do not form part of common property;
- Acquiring air rights which form part of common property from your Owners Corporation; and
- Owners Corporations selling air rights which form part of common property.

Air rights transactions are prevalent overseas, particularly in London and New York, where there are many notable examples.

In Victoria there have been some recent examples of air rights transactions. It is an emerging area of property law that will become more prevalent as Melbourne’s population rapidly grows, the density of developments increase and developers take cues from London and New York.

Acquiring air rights is one way for a developer to preserve a developments view and/or its access to light and air. Air rights are valuable as they may increase the developments marketability and profitability.

Acquiring air rights is akin to acquiring physical land. Taking taxes as an example, stamp duty and possibly GST will be payable on the acquisition. If the air rights being sold and acquired are a separate lot on a Plan of Subdivision, outgoings such as Council rates, water charges and land tax will be payable by the owner.

An alternative to acquiring air rights is negotiating with an adjoining property owner for an easement for light and air to be registered on the Plans of Subdivision for both the adjoining property and the property to be developed. Registered easements have their own advantages and disadvantages, and depending on the circumstances of the transaction, this may be a more appropriate method for achieving your goals.

It is important to obtain legal advice about whether based on the transaction it is more advantageous for air rights to be acquired or for an easement for light and air to be registered.

Lots created on a strata Plan of Subdivision can consist of land, air space, buildings or any combination of these.

The Plan of Subdivision will define the boundaries between a lot and the common property owned by the Owners Corporation. How the boundaries and common property are defined in a Plan of Subdivision will determine who owns the air rights (lot owner or Owners Corporation) and what consent (if any) a lot owner requires to sell, acquire or develop the air rights.

There are a number of different methods for defining these boundaries and each Plan of Subdivision is different. It is crucial to obtain expert legal advice on the Plan of Subdivision.

As with other types of common property, it is possible for a lot owner to purchase common property air rights from their Owners Corporation.

However, to do so is not a straight-forward process. In the first instance you must negotiate the sale of the air rights with the Owners Corporation and reaching unanimous agreement on the sale terms. This can be difficult in itself and may take some time.

If unanimous agreement can be reached with the Owners Corporation, the next part of the process involves the lot owner obtaining the consent of the mortgagee of each lot. This can also be difficult and may take some time, as depending on the size of the development, this could involve numerous mortgagees.

A Plan of Subdivision also needs to be prepared by a licensed surveyor to move the boundary between the lot and the common property. This may will to be certified by Council and lodged with the State Revenue Office and Land Use Victoria.

The above is a short summary and is not exhaustive of the entire process. Prior to commencing negotiations with your Owners Corporation, please contact us for legal advice so that we can advise you on the full process.