UK: Real Estate Bulletin - Spring 2015

Last Updated: 19 March 2015
Article by Clyde & Co LLP

Welcome to the first 2015 edition of the Real Estate Bulletin.

In this issue, we look at a number of recent key developments and cases affecting the property industry:

  • The recent Law Commission report on rights to light and the changes it recommends
  • The first of two articles on significant tax changes affecting UK residential property. This article covers new SDLT rules (a "Mansion Tax" for Londoners?) and increased ATED charges
  • Two recent High Court decisions involving claims against valuers for negligent valuation. For good measure, the valuers were found liable in one but not the other
  • What amounts to malicious damage in a property insurance context when premises are damaged by the tenant
  • Some bad news for residential landlords with the introduction of the right to rent scheme and recent decisions requiring landlords to protect tenancy deposits in authorised Tenancy Deposit Schemes even when the shorthold tenancy was granted before the TDS rules came into force
  • The widely covered case of Griffiths v Hardy which serves as a reminder of the importance of obtaining a professional survey before exchanging contracts for the purchase of property
  • Finally, an illustration of the factors that the Courts will consider when determining the terms of a new lease in unopposed lease renewal proceedings.

Rights To Light

Rights to light are private property rights that benefit both residential and commercial buildings. They can be acquired by express written grant from one neighbouring landowner to another, by virtue of archaic law or by prescription if light has come through a window (or aperture) for 20 uninterrupted years.

Why is reform necessary?

Typically, disputes arise when a developer proposes to erect a building that may impact a neighbour's right to light. These often cause severe delays to development projects and uncertainty invariably operates as a blight in relation to neighbouring properties. Delays average 27 months with a mean cost of GBP 6.86m (according to the responses to the British Property Federation survey).

The lack of certainty in the law is largely responsible for this. The case of HKRUK II (CHC) Ltd v Heaney [2010] increased the uncertainty surrounding the question of when an injunction or damages should be awarded, after the High Court ordered the demolition of two floors of a new building that had already been let.

The Law Commission Report

The Law Commission published a report on 4 December 2014 proposing to reform the current law on rights to light. The aim is to simplify the law in a way that strikes a fair balance between the interest of landowners and the need not to impede property development.

The Law Commission did not adopt its previous recommendation that prescriptive rights to light should be abolished, instead choosing to make prescription operate more straightforwardly.

What are the recommendations?

  • Replacing the acquisition of rights to light by prescription with one straightforward statutory scheme.
  • Updating the current regime that allows landowners to block prescription by the registration of a local land charge.
  • A new statutory test based on proportionality to clarify when Courts may order damages rather than an injunction. The Court will not grant an injunction to restrain the infringement of a right to light if doing so would be a disproportionate means of enforcing the dominant owner's right to light, taking into account all of the circumstances.
  • The Law Commission has not, however, recommended any changes to the measure of damages that should be awarded instead of an injunction. These may still potentially include an uplift to reflect some part of the developer's profits.
  • A new statutory procedure whereby, if a neighbour has not sought an injunction within eight months of being served with a notice of a proposed development, they will lose their right to an injunction. This should provide certainty and remove neighbours' ability to hold developers to ransom by prolonging negotiations.
  • Non-use of a right to light for five years will create a presumption of an intention to abandon that right.
  • All easements (including rights to light), whether created before or after the reform, should be brought within the Lands Chamber of the Upper Tribunal's proposed jurisdiction to discharge or modify obsolete easements.

Solar Panels

The Law Commission also considered the question of whether solar panels enjoy a right to light, concluding that the existing law does not extend to solar panels. If solar panels' right to natural light does require protection, then the solution should be provided by Planning Law.

What happens next?

The changes would be welcomed by both developers and lawyers alike, however, it remains unclear exactly whether or when the Government has any plans to implement them.

To view the full article please click here.

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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