Rights of light can be a significant barrier to development, especially in built-up areas. What exactly is a “right of light” and what steps can be taken to deal with them?
What is a right of light?
Our legal system has long recognised the concept of a “right of light”. It is a type of easement that protects the passage of a reasonable amount of light, through the windows of a building, from across a neighbour’s land. It is a right to stop the neighbour from obstructing that light. If the neighbour decides to redevelop and the new building causes a substantial reduction in the amount of light enjoyed, the objector may be able to stop the development or, alternatively, hold out for significant damages.
How do they come about?
Establishing whether a right of light exists is not straightforward. Rights of light are rarely created intentionally. They normally come about as a result of the building with the benefit of the right simply having been there for at least 20 years and enjoyed access to light throughout that period. If the indications are that a right of light may exist, a right of light expert will need to be employed to assess the degree of light that is likely to be lost once the development has been carried out, and whether this is significant enough to amount to an infringement. This is not easy and involves a degree of subjectivity. Experts may disagree profoundly on whether there will be an actionable breach.
What happens if the development is likely to infringe the landowner’s right of light? There is an inevitable tension between the (understandable) wish of a landowner not to live in darkness, and the interest of a developer in developing its land. Until recently, where an objector’s right of light had been infringed, the objector would almost always have to accept damages. An injunction preventing the development was perceived to be an excessive response to the infringement of a right of light and was rarely granted. That position was reversed in a series of cases within the last few years. This has made life very difficult for developers. Schemes have been delayed and costs have escalated. Aware that they had the power to block development, objectors began to hold out for very large sums in compensation.
To an extent, the balance of power has now shifted back in favour of developers following a Supreme Court decision in February 2014 (Coventry v Lawrence). An injunction will not now be granted where the public interest favours development. However, where damages are awarded instead, they are often a significant proportion of the developer’s profit. The “public interest” test is, moreover, a very uncertain test. Developers should, therefore, seek to settle any potential light claims at the earliest opportunity. The later the negotiations begin, the more leverage the objector will have. Ideally, no development should begin until all light issues have been dealt with or disposed of.
Before launching into negotiations with the neighbours, however, the developer needs to consider whether insurance is an option. This is an alternative to seeking a settlement with the objector. Insurance needs to be considered at the outset. Understandably, most insurers will not be willing to provide cover if the developer has already alerted the neighbour to the existence of a possible right of light and offered to pay him compensation.
Right of light insurance is not the panacea that it may first seem. It doesn’t make the problem go away and it may not allow the development to go ahead. A claim under the policy will need to be referred to the insurers and this will inevitably lead to delay, and delay usually leads to more costs.
Right of light insurance is a specialist product that comes with a hefty premium. The underwriter will need a significant amount of information to accurately assess the risk. The policy needs to be studied very carefully so that the developer knows what is, and is not, covered and, just as importantly, what action might void the policy. The policy may cover all or just some of the potential objections. “Pre-planning” cover is more expensive than post-planning cover because of the risk that the planning process will bring objectors out of the woodwork. Policies will not usually provide cover for loss of profit so, if the objector manages to stop the development, only the developer’s out of pocket costs are likely to be covered.
Insurance may, in spite of its high price tag, ultimately be cheaper than negotiating a settlement with the objectors but the work involved in devising an insurance policy that meets the developer’s needs must not be underestimated.
There have been loud calls for reform in this area. Last year, the Law Commission issued a report setting out its proposals for reforming the law. Most of their proposals are sensible and were welcomed by developers.
The main recommendation is for a new statutory test that would favour the award of damages where the grant of an injunction would be “disproportionate”. Factors such as the objector’s conduct and the extent of the loss of amenity would govern whether damages would be a suitable remedy. An injunction could still be granted in special cases but it would no longer be the default position. Another recommendation is the introduction of a new statutory notice procedure. Put simply, the developer would serve notice on the objector, who would then have eight months to decide whether it wished to apply for an injunction or settle for damages. The idea is to compel the objector to “put up or shut up”. The Law Commission have also recommended that if the right of light has not been used for at least five years, it should be treated as having been abandoned.
Unfortunately, UK governments have a poor record in implementing the Law Commission’s proposals. An earlier report in 2010 is still awaiting attention and those proposals need to be implemented first. Rights of light are therefore set to play a major role in development for some time to come.