Rights of light – where are we now?

Rashpal Soomal and Will Densham provide a legal, technical and market update. Private rights of light continue to pose a significant constraint on development. This runs counter to both social and economic policy. It seems unlikely that parliament will implement the Law Commission’s December 2014 recommendations for the reform of rights of light. So it remains for the courts to step in to provide much-needed clarity. The Law Commission’s 2014 recommendations The Law Commission stopped short of recommending that prescription should be abolished as a means of acquiring rights to light, but did recommend the following: A statutory notice procedure which would allow a developer to require a neighbour to tell them within a specified time if they intend to seek an injunction, or to lose the remedy. A statutory test to clarify when courts may order damages to be paid rather than injunct a scheme. A power for the Lands Tribunal to discharge or modify rights to light. The market The market is recalibrating to cope with two related but distinct pressure points. The first is the increasing number of claims being made by claimant specialist firms that act on behalf of affected neighbours on a no-win-no-fee basis. These firms drum up claims through a combination of door knocking, speculative correspondence, cold calls and LinkedIn posts. Many claims are without merit, but a developer is put to the time and cost of addressing them. In relation to other claims with some merit, both sides would benefit from more clarity as to how reasonable compensation ought to be calculated. The second pressure point is insurance. The market has narrowed with only two, or perhaps three, insurers willing to underwrite larger schemes in London. Even then it is a challenge to secure cover at a level of indemnity that would satisfy a cautious institutional lender providing development finance. Terms are becoming less generous with expensive premiums and a move towards higher excesses, sometimes above the surveyor’s suggested compensation budget. Additionally, cover is no longer readily available on a “wait-and-see” basis, where the professional fees on both sides of negotiating a release are insured and therefore reduce the excess. Instead, cover is now being provided almost exclusively on a “proactive” or “reactive” basis, where the professional fees on both sides are uninsured and therefore do not reduce the excess. This is a nuanced but essential distinction as professional fees per claim (where multiple claims are being drummed up by claimant firms) can be significant. The insurance market is still working out how to evaluate and respond to claims. So in the injunction claim brought by Liechtenstein fund Sirosa against the M&G/Prudential scheme Wells House on Oxford Street, W1, cranes that were erected on site came down mid-construction and works were halted, even though at that point a court injunction was not in place. The market speculated that this was as a result of an insurer direction to stop work pending the final court hearing. Ultimately Sirosa Properties Establishment v The Prudential Assurance Company Ltd settled out of court in November 2022, and insurer and insured were left to resolve whether the construction delay costs were covered by the policy, or not. The above pressure points are fuelled by the uncertainty surrounding key legal and technical principles. Legal principles On the legal side there are evolving arguments around the following key aspects. The first is how a “section 3 consent”, which can prevent prescriptive rights of light from being acquired by long use, operates. There are a number of untested points here. One is whether a section 3 consent in a lease may prevent a freeholder from acquiring rights. Another is whether a section 3 consent in an old deed can, as a matter of law, benefit or bind successors in title to the original contracting parties. Surprisingly, none of these issues have been properly considered by a court. Another common debate currently is whether a light obstruction notice needs to be registered within 18 years and one day, or 19 years and one day. Yet further debate surrounds when a claim is “late”. The normal limitation periods do not apply to a rights of light claim as in law the interference with light is a continuing nuisance, rather than a once-and-for-all nuisance, so technically the claim arises afresh every day. But there has to be a point when a “late” claim is “too late” to merit an injunction and would only attract nominal damages. When does that point occur? It is not uncommon for a claim to be brought at a late stage, sometimes years after practical completion. Clarity on this point would aid dispute resolution. Section 3 consents Rights of light can be acquired by 20 years of long use and this is called “prescription”. Rights can be prevented from being acquired if the person enjoying the light does so by consent. If the light is enjoyed by consent, it cannot found an adverse prescriptive right. A classic example of a “section 3 consent” is a provision in a lease or deed that permits the owner of land to redevelop such land from time to time as they wish notwithstanding any interference with light. The courts have held that such a “right to build” is an implicit consent by the owner to the person enjoying light to enjoy such light unless and until the owner chooses to build. A final area of uncertainty is centred around conduct. When is the conduct of developer or neighbour sufficient to tip the balance either against or in favour of an injunction? So for example in the injunction claim brought by the Bards/Estate Office against the HB Reavis scheme at Worship Square in Shoreditch, EC2, the principal issue was whether the claimant group company conduct, in routinely agreeing rights of light releases across its portfolio, suggested a history of trading light for cash, rather than a concern about loss of amenity, and whether that tipped the balance against the injunction. Once again, the case settled out of court in May 2023. The lack of clarity on all of these issues, which go to the heart of how rights are acquired, how rights can be prevented from being acquired, and the appropriate remedy for any breach, is unfortunate. Technical tests On the technical side, experts are looking again at the Waldram method and considering whether it is fit for purpose in the modern era. The test is based on sky visibility at table-top height and is not sophisticated enough to take into account other important aspects such as reflected light. Surveyors are therefore now routinely testing impacts using alternative software such as Radiance or climate-based daylight modelling. There are also at least two other major technical areas where the language used in the case law is not easily translated into practice. The first is transferred rights. Where an old building with apertures is demolished and replaced with a new building with apertures that overlap with the old, rights are said to “transfer” from the old to new. The cases talk about the same “cone” or “pencil” of light that passed through the old aperture, passing through the new aperture. That concept is notoriously difficult to apply where the apertures do not simply overlap but have moved in plane or angle or where the internal floor levels (from which the Waldram table-top height is measured) have changed. The second area is around cumulative impacts. This issue is centre stage in areas where multiple developments are taking place at or around the same time, with each development cumulatively affecting a common neighbour. Examples might include Vauxhall or the City. Sheffield Masonic Hall Co Ltd v Sheffield Corporation [1932] 2 Ch 17 suggested that each developer could build to the same height as would allow sufficient light to pass to the neighbour. This principle does not really make sense when an additional 10m on each development site would not have a similar impact on the neighbour, this being dictated as much by proximity and angle, as height. This is one of the key issues in dispute in the pending two conjoined cases due to be heard in March 2025, where two residential flat owners within Bankside Lofts in London are seeking an injunction against the Native Land scheme at Bankside Yards. Here, part of the scheme, Tower A, had already been built and the section 203 powers belatedly deployed by Southwark Council, while protecting the rest of the site, cannot protect Tower A as the powers do not have retrospective effect. The issues in this case centre around how to model impacts where part of the scheme benefits from section 203 but Tower A does not, and how to apply Sheffield Masonic in these circumstances. The costs budgets filed by the parties suggest projected costs of nearly £700,000 for the claimant and nearly £2m for the developer, with a small army of experts being deployed on both sides: a rights of light surveyor, a planning expert and two valuers – one to assess the difference in value between the preferred scheme and the cutback scheme and a second to assess the reduction in value of the neighbour’s property. Illumination needed The uncertainty around all of these issues needs to be resolved. At the moment, industry experts are as bemused as an observer of a silent disco: the parties to the litigation are clearly dancing to different tunes, with each side believing in the correctness and strength of their own position. Business and markets need clarity to thrive. Let’s hope that the courts can deliver this in the coming months. Rashpal Soomal and Will Densham are partners at Eversheds Sutherland Image © Suhyeon Choi/Unsplash