Can leaseholders release rights to light?

29 November, 2017

The High Court has considered whether a long leaseholder has a right to release rights to light in the case of Metropolitan Housing Trust Ltd v RMC FH Co Ltd.

The freeholder, RMC FH Co Ltd (‘RMC FH’), granted a 125 year headlease of a building comprising a number of flats on Royal Mint Street, London, to Metropolitan Housing Trust Ltd (‘Metropolitan’). The building lies opposite a development site, the owner of which had obtained planning permission to build a mixed-use development. 

Both RMC FH and Metropolitan considered that they enjoyed a right of light from windows facing the development site. It was common ground between RMC FH and Metropolitan that the development would interfere with that right of light. Metropolitan wanted to negotiate an agreement with the developer to release the right of light in exchange for compensation, but RMC FH argued that the right of light was part of the demised premises and that interference with the right would constitute a breach of the lease, which provides that Metropolitan, as leaseholder, will not permit an encroachment on the demised premises so as to cause damage, annoyance or inconvenience of RMC FH as freeholder. The lease also contains a clause providing that Metropolitan will not permit any easement to be acquired against the demised premises. 

Metropolitan sought a declaration that it was entitled to release the right of light enjoyed by the leased building.

Decision

Judge Morgan refused to make the declaration sought. Metropolitan, as long leaseholder, could not realise its right of light without the freeholder’s consent.

The Judge held that, even though the right of light had not existed at the date the lease was granted, and had instead come into existence during the lease term by prescription 20 years after windows were installed facing the development site, the right of light formed part of the demised premises. Acts of user by a leaseholder which are relied on to support a claim to a right acquired by prescription are treated as acts of the freeholder, and will lead to the creation of a right appurtenant to the freehold. Rights acquired as appurtenant to the freehold are to be treated as being part of the demised premises.

Allowing a development to go ahead which interferes with a right of light enjoyed by the demised premises would constitute an encroachment. There is no reason to limit the ordinary meaning of encroachment to acts that involved actual entry onto the demised premises; it extends to the interference with a right enjoyed by the premises.

Any encroachment would cause damage to the freeholder because it may result in the right of light being extinguished. Even if the right of light continued to exist at the end of the lease, the fact that interruption had continued for many years would significantly reduce the freeholder’s ability to obtain an injunction requiring the removal of the newer development building as an obstruction to the light.

The Judge also considered the implications arising from the fact that the newly opened windows on the development building would acquire prescriptive rights of light after 20 years. This would directly breach Metropolitan’s lease covenant not to allow an easement to be acquired against the demised premises.

The judgment shows that both tenants and developers must carefully consider the wording of a lease to check whether the freeholder’s consent to a release is required and consider inviting the freehold to take part in negotiations.