Restrictive Covenants advice

When carrying out development of land, a developer is required not only to obtain planning permission but they must also comply with any restrictive covenants.

A restrictive covenant is an obligation attached to land which can restrict the owner’s use of the land.  Examples of such covenants may be a limit on the number of properties constructed or a limit on the height of the properties built so as to ensure a neighbour’s view is not restricted.

Does a restrictive covenant on the title mean the land cannot be developed?

If there is a covenant on the title, is it valid and enforceable and will it affect the proposed development?  A covenant will not be enforceable in circumstances where there is ambiguity or, if it is contrary to public policy.

What if the covenant is valid and enforceable?

If this is the case then it is still possible for the land to be developed but it could mean a change to the proposed layout and construction of the development causing additional costs and / or delays.

The possible courses of action which can be pursued are:

Indemnity Insurance – where the covenant is so old that it is not possible to identify the beneficiary then it may be possible to seek indemnity insurance against a claim arising.

A formal release from the covenant – the beneficiary of the covenant may agree to waive the restriction. If so, this will be formally documented in a deed and the restriction removed from the title.

A Lands Tribunal application – under section 84(1) of the Law of Property Act 1925 the tribunal may modify or discharge a restrictive covenant affecting the land.

A court application to declare the covenant invalid – such an application can be made if there is doubt over whether the restrictive covenant is valid and enforceable.

This was the option taken in the case of Bath Rugby Ltd v Greenwood and others [2021] EWCA Civ 1927. In this case Bath Rugby Club (‘BRC’) challenged the enforceability of a restrictive covenant under s.84(2) of the Law of Property Act 1925.  The covenant being: ‘.. no … or other buildings for the purpose of any trade or business which may be or grow to be a nuisance annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood shall at any time hereafter be erected upon the said hereditaments and premises …’.

BRC wanted to build a larger stadium to replace the existing stadium which would also include retail and commercial outlets and car parking. BRC argued that there was no-one who could show they had the benefit of the covenant.

The issue was whether the land having the benefit of the covenant was sufficiently identified in the 1922 Conveyance. In order for the covenant to be annexed to land it must be for the benefit and protection of defined land.  It was decided that as the covenant was for the benefit of the ‘neighbourhood’ this term did not sufficiently identify the land having the benefit of the covenant.  As such, the covenant had not been annexed to land and there was no-one to enforce the covenant.

If you need any advice on restrictive covenants, please contact a member of our commercial property law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.