Rights of Light: a dark art Q&A for developers
Often referred to as a ‘dark art’, Rights of Light can be a challenging concept to understand when you’re faced with dealing with development risk and feasibility. We’ve taken a few of the most commonly asked questions to help demystify and manage preconceptions around the rights and insurance:
Q: I have secured a planning consent which dealt with daylight and sunlight; surely I don’t need to worry about Rights of Light?
A: Unfortunately, this is not the case. Rights of Light is different from daylight & sunlight. Right to Light is a legal easement and needs to be dealt with separately from planning in order to manage the injunction risk that may occur from infringing on your neighbour’s light.
Q: I don’t think I can take out insurance as I need to speak with neighbours about the development to discuss party wall and other neighbourly matters.
A: Insurers understand that these conversations need to take place, so as long as you have stated who you need to speak to during the development process, these discussions can be catered for in the policy wording.
Q: Can I take out an insurance policy on a pre-planning basis when we have not yet finalised the scheme?
A: Yes, we often provide pre-planning insurance based on a jelly mould or outline scheme subject to having a Rights of Light surveyor’s report.
Q: Why would I take insurance out if there is an excess on the policy?
A: It is quite common for excesses to be applied to high risk neighbouring properties where negotiations with neighbours are likely to take place; these negotiations may result in the excess being exceeded and therefore any additional amount will be picked up under the policy. It’s also important to be aware that the primary remedy for Rights of Light is injunction, therefore if your neighbour refuses a financial settlement and issues court proceedings, the insurance will pick up the relevant legal costs, settlements and the diminution in market value of the site and associated costs of ‘cutting back’ the scheme if necessary.
Q: I am selling the site on with planning so why would I need to deal with Rights of Light?
A: It’s likely that any buyer requiring finance or investment to fund the acquisition will need a risk mitigation strategy for Rights of Light. For example, if a surveyor’s report recommends a £2m budget to deal with Rights of Light, the buyer may look for a ‘price chip’ or would ask for insurance to manage the risk (which is likely to be more cost effective).
Do you have any further questions about Rights of Light legal indemnity insurance? Amanda Armitage and Matt Rutter at Legal & Contingency are on hand to provide information about managing Rights of Light risk with insurance and facilitate workshop sessions upon request.
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