Living on a gold mine: how to exploit the wealth beneath your home - Spear's Magazine

Living on a gold mine: how to exploit the wealth beneath your home

In law, you own everything up to the sky and down to the centre of the earth (should you want a super-super-basement)

Homeowners take pride in the inside and outside of their properties: a fresh lick of paint, some lovely objets for side tables, a well-trimmed lawn. But how often do they think about what's above their house? Or indeed, what's below?

In law, you own everything up to the sky and down to the centre of the earth (should you want a super-super-basement) – so if you're sitting on a seam of something shiny, is it yours?

It is quite possible for the ownership of the sub-surface to land – sometimes referred to as ‘mines and minerals’ – to be separated from the ownership of the surface. One way is through manorial rights. These include rights to mines and minerals that were retained by the lord of the manor when the copyhold land was enfranchised (ie became freehold). Manorial rights are required to be protected by registration at Land Registry by midnight on 12 October 2013, otherwise a new owner who buys land after this date will take it free of these interests.

There has been much publicity surrounding manorial rights recently as the Church Commissioners have been making large numbers of applications around the country to register their titles to mines and minerals before the deadline. In particular, the Church Commissioners have been accused of attempting to register such rights to profit from fracking, the controversial method of extracting shale gas.

 

The ground beneath your feet

So, what are the implications and what can you do if the sub-surface of your land belongs to a third party?

> The implication is that works done by you to the land which interfere with materials below the surface (such as constructing the foundations of a building) may amount to trespass and the owner of the mines and minerals may lodge a claim against you for damages.

Is your house sitting a gold mine?

> You could obtain insurance to protect you against trespass claims and also against subsidence damage caused to the land in the event that the mines and minerals are ever worked.

> You could approach the mines and minerals owner to obtain consent to any proposed works – or even to buy their land interest –but this is likely to come at a cost. Also, be very careful because many insurance policies providing protection against claims from mines and mineral owners do not permit contact with the owner.

 

Rich, I'm rich!

If you are fairly confident that you do own the sub-surface to your land, does that mean that you own all the minerals beneath it? Well, not quite.

Oil, gas, coal, gold and silver are owned by the Crown and any owner of the surface of land containing such minerals must obtain consent before undertaking any work or interfering with those minerals.

In short:

> Oil and gas: ownership of oil and gas (including shale gas) within the land area of Great Britain is vested in the Crown and a licence is required (Petroleum Exploration Development and Production Licence, or PEDL) for landward exploration, which grants exclusive rights to explore for and develop oil and gas onshore within defined areas.

Licences are granted by the Department of Energy and Climate Change following competitive bid rounds. The rights granted by such licences do not include rights of access and the licensees must also obtain any relevant consents which may apply under current legislation, such as planning permissions, Environment Agency consents and any approvals required under health and safety legislation.

> Coal: ownership of almost all coal resides with the Coal Authority, a non-departmental public body, which grants licences for coal exploration and extraction.

> Gold and silver: the Crown holds the rights in gold and silver across the UK and the mines of these minerals are known as ‘Mines Royal’. The Crown Estate grants exclusive options to take a lease of ‘Mines Royal’ for a specific area. Exploration and access rights must be obtained from the landowner.

 

Fracking hell!

The system in the UK is different to that in the United States, where landowners do own the minerals under their land and some have become very rich overnight through investment in fracking.

Given the ownership and regulatory restrictions in the UK, shale gas and the like are unlikely to make UK landowners wealthy. John Loftus, the only landowner in the UK so far to have his land fracked for shale gas, has commented that the amount he has received for access to his land from the exploration company is about 1-2 per cent of his income. Nevertheless, there could be other opportunities to exploit in this novel but controversial process.

Serdar Mehmet is a solicitor at IBB Solicitors and may be contacted at serdar.mehmet@ibblaw.co.uk

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