Illuminating Development: Shedding Light on the New Rights of Light Protocol

During the last 15 years, many developers have become accustomed to rights of light insurance policies mitigating the cost and risk of a neighbouring owner seeking an injunction to halt (or worse, demolish) a development as it materially interferes with the amount of light entering their property. However, an increased activity in court proceedings by neighbouring owners has increased the price of insurance, so much so that in some cases it has brought into question the value of it.

So where does that leave developers facing rights of light issues? There is a growing trend of increased due diligence of neighbouring properties and careful planning of cutbacks where feasible to reduce/remove any infringement with rights of light. However, that is not always possible, leaving developers with good, old-fashioned negotiated releases of the neighbour's right to light in exchange for a settlement premium.

Rights of light issues in the context of developments are invariably complex and require expert advice. The launch of a new Rights of Light Protocol (the "RoL Protocol") helps to provide a clear process for developers to follow with the aim of resolving potential rights to light issues on development schemes quickly and cost effectively.

What is it?

The RoL Protocol is the latest in the suite of Property Protocols, Whilst not mandatory, the protocols set out clear guidelines of best practice parties are encouraged to follow with a view to minimising the risk of certain lengthy (and costly) property disputes, including boundary disputes and applications for consent to assign/alter a leasehold property. Whilst various protocols have been endorsed/ supported by the RICS and/or the BPF, the RICS has gone one step further with the new RoL Protocol and incorporated it into the latest edition of the RICS Rights of Light Guidance Note (effective from 1 June 2024).

How does it work?

Step 1 - Introductory Letter and Initial Response

Once a developer has identified that its development proposals risk infringing an adjoining landowner's rights of light, the first step is for the developer to issue an "Introductory Letter" to the adjoining owner prior to commencement of the development. The letter should include key information such as a summary of the proposed development. It should also request access to undertake assessments of the potential infringement and (where the adjoining owner is able to do so, and subject always to data privacy considerations) details of any tenant or occupier of the adjoining property who should also be contacted to arrange access. At this stage, the developer should  recommend that the adjoining owner appoints an independent surveyor to act on its behalf and confirm that the developer will cover any reasonable fees for doing so, usually capped to a maximum amount.

The adjoining owner should respond within a reasonable time (usually 21 days) confirming to the developer whether they are able to arrange access to their property and that they have appointed a surveyor to act on their behalf, providing their contact details.

Step 2 – Exchange of Information

Unless the developer considers that the adjoining owner's rights of light will not be affected, the parties should then exchange information with one another.

The RoL Protocol requires the developer to contact the adjoining owner's surveyor to arrange an inspection (in more complex cases, this may be a joint inspection) of the adjoining land and, within a reasonable time following that inspection (usually no longer than 14 days), the developer's surveyor will write to the adjoining owner's surveyor and share a copy of their technical loss of light analysis.

The RoL Protocol is not prescriptive about what further information the developer may then request, but it may be reasonable to request copies of title deeds relevant to rights of light which the developer is unable to obtain from Land Registry, details of any tenancies of the adjoining property and room layout plans for any adjoining buildings.

The parties should aim to respond to any requests for information within 14 days. If the responding party thinks it may take longer than 14 days, it should let the other party know and provide its anticipated timescale.

Step 3 – Dispute Resolution

Once the parties have exchanged information, the parties should then aim to have an initial meeting on a "without prejudice" basis to narrow the outstanding issues between them and put forward proposals to resolve any potential claim identified. The RoL Protocol acknowledges that the extent to which this will be possible will be circumstantial and vary between cases, but the parties should at least be able to agree the technical level of any loss of light on the traditional Waldram basis together with the book value for that loss. If there are differing views as to the appropriate technical methodologies to be applied or the practical application of them (for example, assumed room layouts or baseline scenarios), the surveyors should seek to explore other methods of analysis.

The parties should agree a list of "agreed" and "not agreed" matters within 21 days of the initial meeting and, where there are matters still contested, subsequent meetings are encouraged between surveyors to try to narrow the issues. It is hoped that most claims will be resolved during this final stage without further escalation. However, if at any point a party considers that the discussions are not progressing, they may issue a formal Letter of Claim to instigate the formal dispute resolution process. It it is strongly advised that solicitor's advice is obtained before escalating to this stage.

The RoL Protocol invites the parties to consider resolving the dispute outside of traditional litigation involving the courts, and suggests mediation, arbitration, expert determination or early neutral valuation (a non-binding assessment by an independent third party of the merits of all part of the parties’ respective positions).

Whilst the RoL Protocol encourages compliance with the spirit of it where reasonable to do so, it should not prejudice the parties' underlying positions. In particular, where a developer has obtained rights of light insurance, the terms of that insurance policy must be carefully considered before taking any steps under the RoL Protocol. Traditionally, it was often a policy condition that the developer was prohibited from communicating with adjoining landowners regarding rights of light issues, a breach of which risked invalidating the policy. Many modern policies impose a positive obligation on the developer to proactively negotiate with the neighbouring owner, but the terms of any policy must be checked carefully. An invalidated policy may prevent a developer from being able to insure against the risk in future, which may have detrimental consequences for the overall scheme - in particular where future funding is required and insurance is a requirement of the lender.

Our view

It is anticipated that the RoL Protocol will become a widely accepted industry standard and followed as a matter of course unless there is a justifiable reason to depart from it. With the recent rise in rights of light litigation, a sensible framework for early engagement and processes to follow where appropriate can only ever be a good thing. It should give parties comfort that providing the suggested information and opening a dialogue around settlement of any potential rights of light claims is not a sign of weakness. However, before taking any steps under the Rol Protocol, a developer should always obtain advice from both a surveyor and solicitor as to the proposed development and the likely infringement of neighbouring owners' rights.

The RoL Protocol does not attempt to prescribe the correct methodology for assessing loss of light in a modern context. Whether the traditional Waldram method is still appropriate has been at the heart of recent court proceedings, although the claims have settled before the court had given judgment. Therefore, we shall have to wait for another case to shine a light on this issue.