Phasing out rights to light

Rights of light are a major impediment to property development in this country, so the Law Commission’s proposed reforms deserve close scrutiny, not least because it is the first comprehensive review carried out in this area.

Rights of light have always had the capacity to frustrate development. More often than not, however, the objector would have to accept damages, as an injunction was perceived to be an excessive response to the infringement of a right to light. However, as a result of a series of cases within the last few years, culminating in HKRUK II (CHC) Ltd v Heaney [2010] EWHC 2245 (Ch), an injunction is now the default position in both residential and commercial cases.

The effect on development has been considerable. Schemes are being delayed and costs are escalating. It is estimated that the cost to the developer of complying with the injunction in Heaney was ten times as much as the damages that the court would otherwise have awarded.

The City of London, where lights issues ?are particularly prevalent, has resorted to using powers contained in section 237 of the Town and Country Planning Act to compulsorily buy out the objector’s right to light. Not surprisingly, therefore, the property industry is exerting pressure on the government to change the law. This has resulted in the commission’s detailed and thorough review, on which comments are invited before 16 May.

Statutory test

The main recommendation is that it should no longer be possible to acquire a prescriptive right to light, although existing rights would not be affected. This is significant, as rights to light are rarely created expressly. They invariably come about as a result of the building with the benefit of the right simply being there for at least 20 years. There is a strong argument for treating rights to light differently from other easements, such as rights of way, which the commission believes should still be capable of being acquired by prescription. Purists may not ?like the distinction but rights of light have always been a sub-species with their ?own peculiarities.

What to do, however, with existing rights? The recommendation is for a new statutory test that would favour the award of damages where the grant of an injunction would be “disproportionate”. Developers will like this as it, in effect, returns the law to where we were pre-Heaney. Factors such as the objector’s conduct and the extent of the loss of amenity will govern whether damages would be a suitable remedy. It is hard to argue with this. An injunction could still be granted in special cases but it would no longer be the default position.

When it comes to calculating damages, however, the commission is not convinced that we need any change. The current “negotiation basis” leads to relatively high damages as it reflects what the developer would pay the objector to release his rights. This usually includes an element of profit share. It could, therefore, be seen as a windfall for the objector, out of all proportion to the loss of amenity or the diminution in value of the objector’s building. Why should rights of light be treated more favourably than other scenarios?

Expect strong views from developers on this point in the consultation.

Eight months

Another recommendation is the introduction of a new statutory notice procedure. Put simply, the developer would serve notice on the objector, who would then have eight months to decide whether it wished to apply for an injunction or settle for damages.

The idea is to compel the objector to put ?up or shut up. However, if damages, rather than an injunction, become the normal remedy, it is hard to see what would be gained by the developer delaying for up to eight months. Far from speeding things up, this complex procedure may encourage objectors to prevaricate.

Historic easements

The commission’s final recommendation is that the powers of the Lands Tribunal to discharge historic restrictive covenants should be extended to rights of light. In fact, they believe it should extend to all easements. This makes sense. Historic easements are every bit as likely to frustrate development as restrictive covenants are.

Most people would agree that reform in this area is long overdue. To that extent, the consultation paper is welcome. However, anyone who expects rapid change is likely to be disappointed. There has already been adverse comment in some sections of the press. UK governments have a poor record in implementing the Law Commission’s proposals. An earlier report in 2010, which suggested sweeping changes to the law on easements and covenants, is still awaiting attention and the new proposals assume that those changes are implemented first. Even with government support, which is by no means certain, it is hard to see these changes taking effect before 2016 at the earliest. Rights of light are therefore set to play a major role in development for some time to come.

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