UK: Rights To Light – Will The Proposed Reforms See The Light Of Day?

Responses to the Law Commission Consultation Paper No 210 regarding Rights to Light recently closed. The views of developers, landowners and practitioners continue to be polarised. There is a sharp contrast between promoting developments, particularly having regard to the shortage of housing and the need for regeneration, and protecting the amenity that landowners currently enjoy.

Influencing the right to light – latest influences

More recent decisions of the Courts have reconfirmed that developers cannot assume they can appropriate rights to light and simply buy them off if and when a claim is made. For example, in the 2010 Heaney case the developer was ordered by the Court to pull down the infringing parts of the completed development. In the 2007 Tamares case the Court looked to compensate the owner of the right to light by apportioning to it a significant part of the developer's profit gained as a consequence of the appropriation.

As a result developers' attempts to gain certainty by negotiations continue to be fraught with difficulties as 'advised neighbours' will refuse to openly negotiate and insist that they have a right to seek an injunction rather than be awarded damages by the Court. Developers may turn to insurers to provide some better certainty in their development and finance appraisals. However, this is often a significant additional expense and crucially does not resolve the right to light and other issues between developers and their neighbours.

In order to promote 'the correct balance' and provide a 'more transparent, fairer and easier' environment the Law Commission have suggested four changes to the law:

  • Abolish the ability of a neighbour to acquire a right to light by prescription (i.e. long enjoyment of over 20 years)
  • A new statutory test to clarify when damages should be granted instead of an injunction
  • A new statutory Notice of Proposed Obstruction ("NPO") requiring neighbours to make clear to developers whether they will be applying for an injunction to prevent an interference with their rights to light
  • Allow developers to apply to the Lands Tribunal to discharge or modify rights to light that are obsolete or have no practical benefit

Future abolition of rights to light being acquired after 20 years enjoyment

The Law Commission's view (shared by developers) that rights to light acquired by 20 years uninterrupted enjoyment (known as 'prescription') should be abolished was not shared by most landowners or their advisers. However, as the previous Law Commission's 2011 proposal in respect of other easements was to retain 'prescription', any reform will need to further consider the desirability of a different regime for rights to light.

Prospective purchasers of land have for many years had to assess what can be built on land taking into account the possibility that neighbours may seek to prevent or restrict development. The real issues are not the creation of rights to light by long enjoyment but the fact that the land owner (or developer) subjected to the right to light does not observe the acquisition of the rights to light as it would in the case of, for example, a right of way. Further, there is great uncertainty surrounding whether and when those rights will be enforced (if at all) and if so whether this will be by way of an injunction preventing an infringement (whether proposed or complete). Additionally there is great uncertainty in respect of damages or the level of compensation to be paid to the neighbour, assuming an injunction is not granted, and whether this will be by way of a share of the developer's profit caused by the infringement (the 'ransom basis') or by way of a hypothetical negotiation between a willing developer and a willing neighbour (the 'non ransom basis') to acquire or release the right to light.

Achieving more certainty

The seemingly unfair issue for developers is the ability of a neighbouring owner (residential or commercial) to assert a valid right to light but take no further action and thereby blight any proposed development notwithstanding the grant of a planning permission. The neighbour may, negotiate solely on a 'without prejudice' basis whilst 'openly' contending it reserves and will rely upon its rights to seek an injunction. As demonstrated in the Heaney case this might lead to an order to demolish the infringing parts of the development if the developer proceeds to build notwithstanding the neighbour's reservation of rights. As a result of the Heaney case, the Law Commission has recommended two reforms:

  • A statutory test: A statutory test determines when the Court should grant an injunction which focuses on whether the grant of an injunction to stop the infringing part of a development or, if built, to demolish that part would be disproportionate having regard to the relative oppression to the developer and neighbour; and
  • A 'put up or shut up' notice (the NPO): Whilst the final details ideally require more thought, the essence of the proposal is that a developer would serve a NPO attaching details of its proposed development and the neighbour would then have to serve a counter notice within a four month period stating whether it objects to the proposed development. If a counter-notice is served the developer and neighbour then have a four month window to negotiate, at the end of which the neighbour is required to issue proceedings for an injunction. If the neighbour does not issue proceedings for an injunction that right is lost in respect of the proposed development or one which causes no greater infringement. The neighbour's remedy in damages is unaffected by the NPO.

The proposals provide that during the eight month procedure the developer cannot infringe the neighbours right to light and the developer is only allowed to serve one NPO in any five year period. These are aspects that may need some fine tuning or reconsideration. For instance the Property Litigation Association have suggested a number of refinements including a procedure to extend the eight month period by mutual agreement if the parties wish to continue negotiations; a forum for resolving any issues that arise in relation to how the proposed development scheme will infringe a neighbour's right to light; and reconsideration of whether the imposition of a five year moratorium preventing developers serving a second NPO for a larger scheme is really striking a 'correct and fair balance'.

Compensation

Opinions also remain divided as to the appropriate level of compensation in relation to a significant infringement where no injunction preventing development is sought or where damages in lieu of an injunction are ordered by the Court or negotiated between the developer and neighbour. If the starting point is that a neighbour should not be forced to release its right to light then the 'ransom basis' – a share of the developers profit gained as a result of that part of the development that infringes the right to light or is gained as a result of the release-seems inevitable and arguably reasonable. This approach appears to be the currently favoured by the Courts provided that the amount awarded also 'has to feel right'. The developers have however argued for a number of alternatives designed to achieve a 'non ransom basis'. These include a hypothetical negotiation between a willing developer and a willing neighbour and a cap based on a sliding scale of the market value of the neighbour's land. The Law Commission was undecided on this topic and recognised the fact that none of the suggested alternatives provided logical or real improvements.

Proposed applications to the Lands Tribunal to discharge or modify rights to light: These proposals are linked to those recommending the abolition of prescription and to the unresolved issues already mentioned in respect of compensation. The Law Commission's suggestions favour a payment to the neighbour of an amount to reflect the diminution in the market value of the neighbour's property caused by the discharge or modification of the neighbour's right to light. The issue that remains to be resolved is whether the proposed jurisdiction will be limited to obsolete and abandoned rights to light and to ones that coincide with previous apertures (in which case there will be relatively few applications) or whether a much wider remit will be enacted.

Conclusion: Having regard to the many unresolved matters and ever present pressures on parliamentary legislative time developers and neighbouring landowners may find that despite the clear need for reforms none becomes a reality. We shall of course keep you well informed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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