Restrictive covenants and your rights to develop
Demands for housing are ever increasing. With a rising population and land in short supply, this has led to owners seeking to optimise the value of their land by way of development. However, it is all too easy to think that obtaining planning permission will give the green light for development.
Often property titles contain restrictive covenants which prevent the owner from using the property in a particular way for the benefit of another’s land. For instance, the benefit may be to protect the over development of a neighbourhood, or to prevent the obstruction of a neighbour’s view.
However, to an unknowing buyer, the restrictive nature of the covenant can have an adverse effect on the value of their property. For instance the landowner’s proposed works may be restricted by a covenant which limits the number of buildings which can be built, or which prevents construction beyond a certain height.
It is important to note that restrictive covenants are not considered in applications for planning permission. Equally, planning permission does not quash any restrictions on title.
Landowners must both obtain planning permission, and comply with restrictive covenants, in order for development to be carried out.
Although the law surrounding restrictive covenants is renowned for being difficult to navigate, should a landowner come across a restrictive covenant, all is not lost.
Section 84(1) of the Law of Property Act 1925
Under Section 84(1) of the Law of Property Act 1925, the Upper Tribunals (Lands Chamber) (‘UTLC’) can discharge or modify restrictive covenants affecting land, provided that one or more of the following grounds can be made out:
Ground (a): the covenant is obsolete by reason of changes in the character of the property or the neighbourhood.
Ground (aa): the covenant impedes some reasonable use of the land.
Ground (b): the beneficiaries of the covenant agree, either expressly or by implication, by their acts or omissions, that the covenant should be discharged or modified.
Ground (c): the discharge or modification of the covenant will not cause injury to those with the benefit of the restriction.
Re Theodossiades’ Application
The recent case of Re Theodossiades’ Application (2017) puts Section 84(1) into practice.
In this case, the applicant sought to demolish the existing house on their plot of land, and erect in its place a two-storey building comprising of six flats.
However, even though planning permission was granted, the property was subject to a restrictive covenant that prevented the erection of no more than two private dwellings.
In an attempt to discharge or modify the restrictive covenant, the applicant brought a claim under grounds (a), (aa), and (c).
The applicant focused primarily on ground (aa), by arguing that the development would have little effect on the value, enjoyment or amenities of the surrounding land.
The UTLC concluded that the proposed development would not cause any permanent diminution in value to the neighbouring properties. Even though the property would become much larger than the original building, the design was held to be sympathetic to its surroundings.
The applicant was therefore held to satisfy ground (aa), and as a result, the covenant was modified to allow the development for which planning permission was granted.
Restrictive covenants need not impede proposed works. In this case the UTLC held that the neighbours’ concerns surrounding the prospect of the development were ‘likely to be worse than its reality’. Such fears can be compounded by outdated covenants which are no longer in keeping with changes in neighbourhoods.
It is possible for both homeowners and investors alike to enhance and protect the value of their land through seeking modification or discharge of covenants. However, the law surrounding restrictive covenants is complex, and ultimately each case is fact dependent.
With this in mind, landowners need to give careful consideration to the impact of any restrictive covenants affecting their property.
In particular, it can be difficult to determine who the beneficiaries of the covenant are and whether the covenant is in fact enforceable.
It is therefore crucial to obtain legal advice early on in order to ensure that any planned building works are not in breach of any restrictions and to ensure successful negotiation should modification be required.
Please contact a member of the Property Dispute Resolution team if you require assistance - PDR@daviesandpartners.com