Author: Anna Beadsmoore
Natural light is generally perceived as a desirable quality, particularly in residential premises, and can often enhance the value of a property.
How do you identify a right of light?
In order to ascertain whether or not a particular property enjoys a right to light, the age of the existing building should be considered (we cover this in greater detail below). You should also find out whether the injured property has replaced a previous property. A review of the legal title should be conducted to all the relevant properties. To do this, it would be beneficial to instruct a surveyor to identify any affected properties as well as a solicitor to review all necessary legal titles.
How do you acquire a right to light?
There are many ways a freehold owner and tenant can acquire a legal right to light over neighbourly land. Some examples below:
- Rights can be granted expressly in a transfer or lease.
- By prescription: Following 20 years or more enjoyment, pursuant to the Prescription Act 1832 or the common law doctrine of lost modern grant.
- Right of light can transfer automatically from a demolished building if the position of the windows in the new building is essentially the same as the windows in the demolished building.
What to consider when developing?
There are certain factors that can be looked at when developing and potentially breaching a third party right to light.
- Is the breach necessary? Can a viable development still be implemented without a breach? This removes the risk entirely.
- What should the developer’s strategy be? There are many ways that a strategy can be implemented:
- Wait and See
- Agreed Conduct
- Reactive Agreed Conduct
- Developer conduct: In Beaumont Business Centres Ltd V Florala Properties Ltd 2018, we saw that the developer’s conduct was questioned and therefore the judgement took this into account. Try to liaise with neighbouring properties and negotiate with injured parties. If they are not willing to negotiate, the fact that the developer engaged at an early stage, may be beneficial in the event of an injunction claim.
Why is a right of light insurance policy important in the context of development?
First and foremost, a right of light can be protected by legal action. Therefore, the likes of an injunction to restrain development that infringes a right to light can be made, as well as an order requiring a completed development to be cut back. As you can imagine this can create considerable delays to development projects, as well as added costs.
Developers (and funders) must try to ascertain at an early stage whether their scheme may infringe such rights and if so, factor in the potential requirement for a right of light insurance policy.
An insurance policy can cover both pre and post planning developments. Specialist brokers will also be able to structure options for stage 1 and stage 2 premium attaching key milestones within the project into the policy if it is placed on cover pre-planning, so that this breaks up the cost.
What is covered by the policy?
The majority of policies can cover the following:
- Court costs and out of court settlements
- Loss in the market value of the property
- Defence costs, legal fees and other expenses
- Abortive costs of works and alteration, demolition and reinstatement of a property
- Professional fees associated with the above
Additional coverage options
Delay costs: The costs associated with the suspension of works pending a court order or resolution of a claim.
Business interruption: Loss of rental income and service charges in the event of an injunction.
Re-location costs: Costs of relocating tenants in the event of an injunction or court order pending resolution.
Interest on loans or fees associated with early termination: Where financing is in place, fees and interest can mount up particularly if there are delays.
Service provider costs: Utilities and other services can be covered by the insurer if there is a delay in a development due to the defect. Some insurers provide Delay Costs as standard in their policies.
Liaise early with your legal team, right of light surveyor, and insurance broker. The earlier your broker is involved, the easier the placement of a policy that fully protects the developer. Think about the strategy to adopt — taking into consideration the developer conduct, the needs of the insurer, and the advice of the legal team/surveyor is key before a policy is incepted. What happens if there is a claim? Notify the broker/insurer immediately and do not send any correspondence without the insurer's written approval. This is critical and could affect your ability to claim under the policy.
What information do we need?
- Gross development value
- Rights of light report including Equivalent First Zone figures (EFZ)
- Details of any neighbourly matters e.g. party walls/crane oversail
- Details of whether any light obstruction notices have been served
- Planning officers’ report if cover is required post planning