The City of London is preparing to use extraordinary planning powers to enable Land Securities and Canary Wharf Group’s 20 Fenchurch Street development to go ahead. The corporation will vote next Wednesday on whether to give the “Walkie-Talkie” immunity from rights-of-light claims that could halt development.

The City planning officer has produced a report, which was made public this week, urging the planning committee to invoke section 237 of the Town and Country Planning Act – a seldom-used power intended to protect development that provides economic benefit to the surrounding area.

The developers approached the City after the Heaney case, which was expected to set a legal precedent for rights of light, but was settled out of court in March before reaching the Court of Appeal.

They took advice from rights-of-light experts before starting groundwork and agreed settlements with “a number of” neighbouring property owners that were likely to pursue injunctions.

But the report said the Heaney settlement raised the prospect of seven further owners on Fenchurch Street, Eastcheap, Philpot Lane and Lime Street taking action that would stop the development.

To use section 237, the City of London must have an “interest” in the site. One option is to transfer the freehold to the corporation, which would grant the developers a 999-year lease at a “peppercorn” rent.

Colette O’Shea, head of development for Land Securities’ London Portfolio, said: “For the City of London to consider using its section 237 powers, is an appropriate approach to support the continued growth of London.”

The developers are in talks with prospective tenants whose leases expire in 2014 and who are seeking a prelet of more than 100,000 sq ft. The report states that, because of the size of the space involved, these tenants must have certainty on the completion dates of the scheme before the end of the third quarter of 2011, or they would be likely to look elsewhere.

In the days following the Heaney settlement, an unofficial “developers working group” that includes British Land, Stanhope, Great Portland Estates and Hammerson began to consult with rights-of-light experts on the implications for their developments.

One expert advising with the group said: “The Heaney case hasn’t changed the law, but it has changed perceptions in two ways. For developers, it looks likely the courts will exercise discretion against them concerning rights of light. For owners, it looks pretty easy to write a letter and get an injunction.”That’s why developers are taking another look at these big City schemes.”

The City’s intervention is a sign of its commitment to London’s economy. Last month the committee voted to use section 237 powers to protect Helical Bar’s 1 Mitre Square scheme, in which the corporation already had an interest, but 20 Fenchurch Street is the first time it has acted on a scheme in which it had no previous ownership.