Right to Light (also referred to as Right of Light), is a legal term for a property rule which gives a building the right to get light from the sky through a window, and prevents buildings being constructed next to other buildings which block light. Lloyd & Whyte Legal Indemnities provide Right of Light Indemnity Insurance solutions which protects against any right to light compensation claims which might arise.
Why is Right of Light Indemnity Insurance so important?
In an era of increasingly dense urban development and a tendency to build upwards rather than outwards, developers, neighbouring owners, conveyancers and professional advisers are regularly confronted by right to light risks that can threaten even well-planned schemes.
The issue sits at the intersection of property law, surveying practice, planning and technical daylight analysis. Crucially, obtaining planning permission does not extinguish a private right to light. Developers are often surprised to discover that a scheme with full planning consent may still be vulnerable to an injunction or a claim for damages.
What are the conveyancing implications?
Conveyancers cannot assume that planning permission has resolved, or will resolve, a potential right to light issue. Equally, ongoing negotiations or the implementation of risk management measures do not eliminate the possibility of a future challenge. From a transaction and development perspective, right to light claims can introduce uncertainty, delay and potentially significant financial exposure.
As a result, specialist Rights of Light Indemnity Insurance has become an important risk management tool.
Hypothetical scenario
A residential development may comprise 200 units with an estimated Gross Development Value (GDV) of £20 million. Whilst a right to light issue may affect a neighbouring property worth £200,000, the financial exposure could be significantly greater if the outcome requires changes to the building’s design or massing.
Where construction has already commenced, additional considerations may include delay costs, contractor claims, increased financing costs, professional fees and lost sales revenue. In such circumstances, the value of the risk can extend far beyond the affected neighbour’s loss of amenity.
In this scenario the insurer may assess the exposure at well above £200,000 if:
o Redesign costs are £1 million
o Delay costs amount to £500,000
o Contractor claims total £200,000
o Professional fees add a further £100,000
In this scenario, the insurer’s total exposure could exceed £2 million, notwithstanding that the neighbouring property itself is worth £200,000.
Conveyancer’s checklist: Right to Light risks
When acting on a development or redevelopment project, consider the following:
- Has a right to light assessment been undertaken by a suitably qualified surveyor?
- Are there neighbouring properties that may have acquired a right of light through long-term use?
- Has the client relied solely on planning permission as evidence that the development can proceed?
- Have any neighbouring owners raised concerns or made objections relating to light?
- Has the Gross Development Value (GDV) and overall financial exposure of the scheme been considered when assessing insurance requirements?
- Is the proposed indemnity limit appropriate for the scale and stage of the development?
- Have the policy wording, exclusions, conditions and notification requirements been reviewed carefully?
- Are funders, purchasers, successors in title and other interested parties adequately protected under the proposed policy?
- Has consideration been given to obtaining quotations from insurers with specific right to light underwriting expertise?
- Does the client understand that the cheapest premium may not necessarily provide the most suitable cover?
- Has cover been arranged before actions are taken that could prejudice insurability?
Please note: The above list comprises a few recommendations and is not an exhaustive list.
Before exchange, funding, commencement of construction or completion of a development, ask:
If a right-to-light claim were brought tomorrow, has the potential legal and financial exposure been identified, assessed and appropriately insured?
A broker’s perspective
For many conveyancers and developers, access to a specialist broker like us can be crucial. An experienced broker will:
- Understand the differing appetites of insurers
- Assist in presenting risks effectively
- Help ensure that proposed indemnity limits and policy wordings are appropriate for the development concerned.
We work closely with insurers active in the legal indemnity market and can assist you, whether you’re a conveyancer or developer, in identifying suitable solutions for right to light risks.
In conclusion
Right to Light Indemnity Insurance is often best considered before any approach is made to potentially affected neighbours, as prior contact can materially affect insurers’ willingness to offer cover. As with many title-related risks, insurers are generally more comfortable dealing with uncertainty than with a known and active dispute. Early consideration of the insurance you need can help preserve options that may not be available later in the development process.
Contact us
To discuss the arrangement of Right to Light Indemnity Insurance, get in touch with our team of insurance experts. We can search the market on your behalf and find a suitable insurance policy which provides financial protection at the correct level. We can also provide advice on the options available to you and offer guidance on which policy type would suit your client.
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