Rights of Light Insurance
A right to light gives the owner of a building with windows that are receiving natural daylight a right to maintain an adequate level of illumination for the continued comfortable enjoyment of the room or rooms receiving that light.
In the absence of documents or evidence to the contrary, it can usually be assumed that a building that is more than 20 years old may well have a right to light.
Any neighbouring building owner who has a right to light has the potential to prevent any development that will reduce the level of light they receive below a certain level. Their primary remedy for an infringement of their rights is injunction.
Even if a claimant does not seek to prevent the development, they may be entitled to significant and punitive compensation in recompense for the infringement of their rights.
Rights to light are independent of the planning system. The grant of planning permission does not necessarily prevent an neighbouring building owner from enforcing their rights to light.
Why take out Rights of Light Insurance?
Recent case law has significantly changed the perceptions of risk associated with Right to Light, particularly in the context of commercial schemes.
In 2010 the stakes were raised significantly by the Courts in the decision in the case of HKRUK II (CHC) Ltd v Marcus Alexander Heaney in which the neighbouring building which had a right to light was used for commercial purposes.
The judge decided to grant a mandatory injunction requiring the claimant developer to cut back the offending works and demolish the sixth and seventh floors. This was despite the fact that there was less than a 1% loss of light and despite cutback costs of up to £2.5m when compared with a book-value loss of light to the benefiting neighbouring building of up to £80,000. This matter ended up being settled out of court. However, it is widely considered that the payout to the neighbouring property owner was significant.
In the Tamares v Fairpoint Properties case in 2007, the court held that a minor light loss to a staircase was sufficient to constitute a nuisance and the judge calculated the award of damages in lieu of an injunction by taking a one-third split of the developer’s profit, only slightly reduced having regard to the modest nature of the infringement.
The potential risks concerning rights of light can be very high. Any action taken by an neighbouring building owner who is suffering an infringement of their right to light can potentially cause significant delays and financial losses to a developer. Any action could result in increased costs, compensation and damages, prevention or redesign of the development, and in extreme cases, required demolitions.
It is unlikely to be practical (and may not even be possible) to negotiate a release with every neighbouring building owner who has or may have a right to light which will be infringed by a proposed development.
Benefits of Rights of Light insurance
Rights of Light Insurance provides protection against financial losses that might arise in the event of enforcement or attempted enforcement of a possible breach of a right to light.
Generally, a policy will provide cover in the event that a development is prevented or curtailed so that it does not infringe an enforcing and entitled neighbouring building owner’s right to light. Rights of light insurance provides cover against:
- Potential costs and compensation claims
- Abortive and additional costs of works
- Diminution in value
Insurance allows a development to proceed without the delay of negotiating releases of rights of light with all affected neighbouring building owners.
Rights of Light Insurance should be considered as part of an overall risk management strategy. A policy can provide the developer and their funders with protection against financial losses arising in the event of enforcement or attempted enforcement of rights of light.
Rights of Light policies are tailored to individual developments. Policies provide cover in perpetuity and provide protection to developers and funders from financial losses. The benefit passes on to successive owners of the property and their mortgagees.