One of the overlooked issues that can become a major stumbling block to new development sites is that of restrictive covenants, which places constraints on the use a piece of land can be put to. These can transform an otherwise prime site into something rather more difficult.

A restrictive covenant is a binding obligation, for the benefit of adjoining land, not to use land for a particular use or purpose.

Covenants that are truly restrictive in nature bind and run with the property itself, rather than binding just a particular owner of that property. Once a covenant of this kind is in place, it restricts and limits what any owner of the land can or cannot do with it, including the current owner and future owners.

Common restrictive covenants include:

• Preventing an owner from altering a property, such as converting a house into flats or building an extension;
• Preventing buildings or structures from being erected on the property; or
• Preventing a business or trade from being operated on the property.

If a covenant is breached, either knowingly or unknowingly, action could be taken against the landowner. Injunctive relief or damages could be sought by the owner of land which has the benefit of such covenants.

What options are available then to landowners and would-be purchasers to lift or vary such restrictive covenants?

Can the Courts help lift restrictive covenants?

Parties wishing to have a restrictive covenant lifted or varied can make an application to the Upper Tribunal (Lands Chamber). The grounds for an appeal are covered in Section 84(1) of the Law of Property Act 1925, and include:

• circumstances where the Court considers there is a material change in the character of the property, or the neighbourhood, which means that the restrictive covenant is obsolete for that area;
• the covenant impedes reasonable use of the land for public or private purposes;
• the person owning the land that benefits from the restrictive covenant has agreed (including impliedly) that the covenant should be lifted.

The Court procedure can be expensive and time consuming, and the decisions reached by the Upper Tribunal can be difficult to predict.

A successful applicant will not only have to pay their own costs, but a decision to lift or vary the covenant could also result in payment of compensation to the landowners that benefit from the restrictive covenant. Unsuccessful applicants will have to pay their own costs and those of the other parties.

Lifting the restrictive covenants successfully

The case of HAE Development Ltd v The Croft Ealing Ltd [2022] UKUT 120 (LC) demonstrated how the Upper Tribunal may treat older restrictive covenants, particularly when planning permission has been granted.

The restrictive covenants in this case dated from 1955; they prevented more than one house being built on the site in question and limited other uses that might cause a nuisance or annoyance.

Having obtained planning permission for the construction of eight flats on the land, the developers applied to the Upper Tribunal to have the covenants lifted on the grounds detailed above.

The parties objecting to the application argued the covenant was designed to maintain the land as one house rather than multiple flats.

The Court found that since imposing the covenant in 1955, the surrounding neighbourhood had changed considerably, with many buildings, including the land owned by the parties objecting to the application, converted into flats. As such, the Court found the purpose of the covenant was therefore ‘superfluous’.

The objecting parties claimed the development would result in their adjoining land being overlooked and the area being subject to more intensive use.

The Court found the wording of the restrictive covenant was insufficiently specific for the objecting parties to gain any ‘advantage’ from not being overlooked, as the development of the single house permitted under the covenants, would potentially cause the same problem.

The Court also found that any other possible issues had been dealt with by the conditions governing the planning permission.

The Court found that the restrictive covenant, if applied, would impede the reasonable use of the land for housing, while not securing any practical benefit for the parties objecting.

As a result, the restrictive covenant was discharged by the Court.

If you need advice about restrictive covenants on a property you are hoping to develop, please get in touch. Jonathan Rowley, Director in our Commercial Property team, has expertise in acting for landowners and developers on a broad range of development issues, including restrictive covenants. You can contact Jonathan on 01543 431990 or email jrowley@ansons.law.

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