Demise of long leasehold property

Whether the subsoil was included in the demise of a ground floor maisonette

The background

In Gorst & another v Knight [2018], the leaseholders held a long lease of a maisonette at the ground floor level of a property. They wished to convert the cellar of the property into additional living space and they obtained planning permission to dig down in order to gain more height. The landlord objected, arguing that the lease demise did not extend to the subsoil underneath the property.

Referencing the lease’s terminology, the demise wording did not include subsoil, because subsoil did not form part of the ‘Building’. The demise was limited to the ground floor flat, the cellar and the foundations. The Court also considered the rights granted to the leaseholders by the landlord, which included the grant of rights to services through conduits ‘under’ the demised premises; it could therefore be held that the landlord retained ownership of the subsoil, as otherwise no such grant of rights would need to be made.

The decision

Whilst there is no general presumption in place, the Court held that the lease’s demise did not include the subsoil beneath the building and dismissed the leaseholders’ appeal. Considering what the landlord was able to grant at the time the lease was granted, as well as the terminology of the lease itself and the intentions of the parties, the Court’s judgment concluded that it was up to the freeholder whether she allowed the works to go ahead, and whether she required a compensation payment to be made.

In reviewing a similar case concerning airspace above a property, that of Davies v Yadegar [1990], the Court held that the principles did not apply in Gorst. Subsoil was considered to be crucial to the overall stability and integrity of the building, and as it was underground could mask problems which would be more visible in a roofspace development. This argument was therefore dismissed.

Advice and action for landlords

Extensions below ground are becoming much more commonplace, particularly in central London and areas where ‘over ground’ development is more restricted, whether by space or by planning controls.

This case is reassuring for landlords, supporting careful drafting that excludes subsoil in the demise. Even where a demise does not expressly exclude the subsoil, this case allows landlords some flexibility in order to protect the overall stability and integrity of the building, as well as preserving value. It is also worthy of note that a grant of services through conduits ‘under’ the demise served to support the landlord’s argument.