In 2010 the High Court ordered a developer to remove the recently-constructed top two floors of a city centre development at an estimated cost of £2.5 million. The development had been completed, fully furnished and part of the floors in question had already been let to tenants. This cut no ice with the court. The offending floors infringed the rights to light of a neighbouring office building owned by a Mr Heaney, and on that basis an injunction was granted to undo the infringement. Unsurprisingly, this caused consternation among developers, and whilst Heaney is seen as a high water mark, the message is clear: ignore rights to light at your peril.
Dealing with rights to light can be a serious headache for developers. They are usually undocumented, arising by virtue of the fact that light has been enjoyed via defined apertures in a building for an uninterrupted period of 20 years. It can be difficult to ascertain whether they have arisen at all and if so who has the benefit of them. The owner of the right may be awarded an injunction to prevent infringement, or (at the discretion of the Court) damages in lieu of an injunction. As such, rights to light have the capacity to significantly affect the viability of a development scheme. The risks and potential costs can be greatest in relation to city centre developments, where the high density of buildings can make for a complex picture of multiple potential rights and beneficiaries.
How should a developer deal with rights to light issues? The first and overriding point is not to ignore them. A strategy should be formulated to mitigate the effect of rights to light from the outset. The options set out below are available to developers as tools which may assist in managing and reducing that risk. They should not be viewed as mutually exclusive and indeed are often used simultaneously as part of a risk management strategy.
Limiting Infringement by Design
Developers should consider rights to light in the context of the design of their scheme. Can buildings be configured so as to limit the level of infringement on neighbouring properties? Is there any flexibility in the design to reduce height without affecting the viability of the project? It may not be desirable or even viable to design the development so as to avoid infringing any rights to light whatsoever, but a degree of flexibility may assist in negotiations with neighbours, and will help to demonstrate to the Court (if things get that far) that you have tried to act reasonably.
Light Obstruction Notices
Light Obstruction Notices are a tool which can be used to prevent rights to light from arising at all. If the apertures in a building have not yet accrued 20 years' uninterrupted enjoyment of light, a developer may use a Light Obstruction Notice to put in place a notional obstruction which interrupts the period of continuous enjoyment and can prevent rights to light from being acquired. The notice is served on those who will be affected by it and is also registered as a local land charge. If neighbouring owners fail to challenge the notice, the developer's position will be strengthened. If a challenge is made, this at least has the benefit of flushing out potential claims.
Securing a release by agreement in exchange for payment and/or a mutual release of rights may seem the obvious way to remove the risk of injunction, but problems can arise. Disputes can occur as to the appropriate level of any payment, particularly in high value cases. In lower value cases the neighbour may not be motivated to engage with the developer and negotiations can drift on for months and even years, leaving the developer with a difficult decision as to whether to delay the project or proceed and risk legal action. If the neighbouring title is complex, with multiple interests and/or occupiers, it may be difficult to assess who has the benefit of rights to light and therefore who should be party to any release. Multi-party releases can be complex and slow to negotiate and even once completed there may be a residual risk that not all beneficiaries of the rights have been picked up. This risk can, however, be managed via insurance (see below).
Rights to light insurance can be an attractive option for developers who do not have the money – or, more usually, the time – to spend on lengthy negotiations with neighbours before proceeding with the development. The potential financial exposure arising from an infringement can be limited by an appropriate insurance policy. This option will not of course eliminate the risk of a claim. It can however provide cost certainty and protection with regard to potential losses which may be suffered should a claim succeed, for example demolition costs, loss of market value or reduction in return on investment if the development has to be altered or limited as a result of an injunction. Insurance can be obtained on terms which allow the developer to continue a dialogue with neighbours (within parameters pre-agreed by the insurer) in order to move towards a negotiated settlement.
Local Authority Intervention
If there is an argument that the development is in the public interest then it may be possible to persuade the local authority to intervene and exercise its powers under the Housing and Planning Act 2016 (which replaced similar powers under the Town and Country Planning Act 1990) to effectively override any rights to light. This solution has the benefit of overriding all rights to light, but it is not suitable in all cases. The local authority must acquire the land in order to exercise its powers and statutory restrictions apply which impose requirements as to the nature of the development which can benefit. Developers would still have to satisfy the local authority that the use of the procedure was necessary and that genuine efforts have been made to resolve the issue without recourse to these powers.
The final option is developer-led litigation aimed at securing a declaration from the Court that should the development proceed, the suitable remedy for any infringement is damages and not an injunction. The Court can be asked to determine the appropriate level of damages and the developer can then proceed following payment. It goes without saying that this is a high risk strategy which can backfire spectacularly (this is exactly what happened in Heaney), but if the infringement is small and the neighbour is behaving unreasonably, some developers may consider it worth the risk.
As for Mr Heaney, he ultimately accepted a (no doubt substantial) settlement payment to allow the offending building to stay in place untouched – but his case remains a stark warning to developers of the need to manage rights to light early and well.