The Corporation of London is to buy an interest in the new 22 Bishopsgate tower, to stop aggressive compensation demands for loss of light holding up the project.
The 62 storey tower, designed by architects PLP, was given approval at November’s planning meeting. It will replace the stalled Pinnacle project, which began construction but did not advance after concerns about its ultimate project cost, and funding issues.
The move, using section 237 of the Town and Country Planning Acts, should enable construction to start and hit a January 2019 completion date. With active demand for around 3.3 million sq ft of offices in central London, and a number of lease breaks in 2019, it is felt this date would be a signficant one, in order for the new skyscraper to meet the demand in the market.
Despite the planning approval, the project’s promoters – in common with all similar projects – needed to agree compensation with any nearby building owners or occupiers, who would be negatively affected by the development. A Law Commission report on the whole issue, published in late 2014, proposed tidying up the law on rights of light, to make the process simpler and reduce aggressive claims for compensation; it should, ultimately, make it to the statute book.
In the meantime, the Corporation of London and city developers agreed a legal response to aggressive compensation claims, utilising a section of the TCPA. The authority may purchase an interest in a site, where it can argue a public interest in helping it to progress; and once that takes place, claims for compensation are stilled. The procedure has been used, and threatened in order to achieve negotiation breakthroughs, on a number of occasions in the City.
The project drew claims from 61 nearby properties that say their light will be negatively affected by the construction of the tower, affecting 90 different legal interests. The volume of claims was slightly more due to the revised profile of the new tower design; the previous Pinnacle design would have affected 53 properties.
According to City planners, the site owners contacted affected owners in March and April 2015, while offers of compensation have subsequently been made to 80% of those with an interest.
A year on, there has been plenty of foot dragging. Despite almost all those affected appointing a rights of light specialist, to date, just 19% had progressed to agreeing heads of terms for compensation to cover their loss. The City’s report noted “the very large numbers of parties who may wish to bring claims yet display no serious intention to negotiate deeds of release” and the concern there may “unknown dominant owners” who had yet to deliver a demand. Also, with a wish to start building, the developers know they will need to commit around £300m to order materials.
The planners said they considered the whole issue of light, when looking at the 22 Bishopsgate proposal: “It was not considered that the impacts would cause unacceptable harm to daylight and sunlight levels to the majority of those properties identified as sensitive and the impact on
residential properties would be acceptable. There would be instances of minor to moderate adverse effects to some non-residential buildings caused by the proximity of the buildings to the development site. The Chief Planning Officer concluded that this is not uncommon in a densely developed area such as the City.”
One challenge the corporation has seen off came from the Leathersellers, who own a number of freeholds close to the development site, in St Helen’s Place, Great St Helens, Camomile Street, St Mary Axe and Bishopsgate that together add up to half the affected properties. Their legal advisers, Eversheds, successfully argued for the enforcement action not to be discussed at the planning committee’s March meeting, alleging at the time “there is no public justification for the Corporation to engage its powers”.
The decision to go ahead with the corporation’s intervention comes as it also agreed not to proceed with the same move, on another City site. The threat of the section 237 procedure at 120 Moorgate has helped focus minds such that the developer is now close to completing an agreement with the owners of the neighbouring 1 Finsbury Circus, over compensation for their loss of light due to the proposed new block.
LPA Perspective: Is 22 Bishopsgate ready to get built now? Or could there be a last minute legal challenge from the Leathersellers. Their legal advisers thought the corporation was skating on thin legal ice, in early March – and they could yet deliver a challenge; City livery companies are often well funded, and look to the long game.
However, if that were to happen, the danger is that the 22 Bishopsgate development would be finished too late to take advantage of the City office leasing market that is expected to be particularly buoyant in 2019. And the site could once again be in danger of being left fallow.
Meantime, everyone – apart from rights of light consultants – must be looking forward to the law commission’s draft bill completing its slow route through Parliament, into the statute books. The mess that is rights of light compensation needs tidying up once and for all.