What is a Restrictive Covenant?
Restrictive covenants state what an owner can or can’t do with their home or land, restricting their use of the property in some way. They are binding conditions or clauses written into a property’s deeds or contract that prevents the homeowner from completing certain acts or alterations.
It is possible to remove a restrictive covenant if you have the permission of the person who has the benefit. It’s not always possible to identify who this is but they are often put into place for the benefit of neighbouring properties.
Compare My Move works with a variety of property and finance experts to create accurate and helpful articles that can guide you through the buying and selling process. In this article, we’ll explain exactly what a restrictive covenant is, why they’re used and what you can do to remove them if you wish to do so.
Examples of Common Restrictive Covenants
Restrictive covenants are often set in place to maintain the character or uniformity of a property or area. They are often imposed by the housing developer or seller and can be found in the title deeds when a house is completed. There can also be restrictive covenants in your lease when buying a leasehold property.
There are a variety of restrictive covenants that you may see when buying a house. Here are a few common covenants to look out for:
- Do not park caravans or commercial vehicles on the property
- Do not cause annoyance to neighbours
- Do not build or construct any buildings on the property
- Do not build walls or fences above a certain height
- Do not conduct any alterations without consent (e.g. build an extension or convert it into flats)
- Do not use the property for business or trade
- There may be limitations on if and how many pets you can keep on the property
The restrictive covenants listed above are fairly common but there are still many more you could come across. Some restrictions may even go as far as asking owners not to play musical instruments at certain times of the day. The type of covenant and the level of detail provided will depend on the person who enforced it.
Who Can Enforce a Restrictive Covenant?
Typically, the legal owner of the land intended to be benefited by the covenant is the one who can enforce it. Landowners are generally able to impose restrictive covenants on the land they’re selling to protect its value and minimise any possible damage.
The main reason covenants are designed is to uphold particular standards for the residents. This is especially true for new build restrictive covenants. Many covenants imposed by housing developers or property management companies are to prevent owners from completing work or other acts that could negatively impact the neighbourhood or affect a desired level of unity.
They are generally put in place to benefit someone, particularly neighbouring properties. This means that anything from fixing a satellite dish to keeping livestock could be included in the title deeds as a restrictive covenant.
Do Restrictive Covenants Only Apply to New Builds?
No, restrictive covenants can be placed on new builds, older buildings and land. If you’re buying an older home with covenants imposed, do not think that the age of these restrictions will affect their validity or relevance. They must still be enforced even years after being included in the deeds.
However, some old covenants may be considered unenforceable if the original owner or builder can not be found. They can also be unenforceable if the wording used is too ambiguous or if it has become outdated. For example, there may still be some covenants restricting the sale of ‘intoxicating liquor’ in older builders. These are often seen as outdated.
How Can Restrictive Covenants Affect Homeowners?
Restrictive covenants ‘run with the land’ which means they are applicable to all future owners of the land or property. This means that when you’re buying a property, you will want to instruct your conveyancing solicitor to inspect the deeds and to highlight any existing covenants before committing to the transaction. This is because you will be held accountable for any breaches incurred and so it’s important to know as soon as possible.
Whilst viewing the deeds, it would also be wise to find out where the ‘benefit of the covenant’ resides. It typically resides with the current landowner but it may have been passed onto another individual or company. This will be the person who can answer any of your queries and who enforces any breaches.
When you’re deciding whether to purchase the property, consider how the restrictive covenants may affect the value of the building. Some covenants may restrict you from building an extension or other work, affecting its future value. This is an important factor to consider as some mortgage lenders will refuse to lend on properties where certain covenants will affect its future sale-ability. If this happens, speak to the vendor about potentially removing the restrictive covenant.
How Do I Find Out What Restrictive Covenants Are On My Property?
You will likely be made aware of any restrictive covenants on the property by your solicitor during the conveyancing process. Ensure you discuss them with your conveyancer and that you fully understand what they are and what they mean for you as a homeowner.
However, if you would still like to search for the covenants yourself, perhaps on a property you already own, then this should be done through HM Land Registration. If you use the official Land Registry website, you can apply for copies of the title of the property by searching its address.
If the property is registered, as it legally should be, then they can provide you with a title number. You can then search for the title deeds as well as the title plan which will show you the approximate boundary and layout of the property. You will also be presented with a variety of other documents. The restrictive covenants will likely be referred to in the ‘Charges Register’. All documents can be purchased for a small fee.
What Happens if There’s a Breach of a Restrictive Covenant?
If you breach a restrictive covenant, whether knowingly or unknowingly, you could be forced to undo the work, pay a fee or face legal action. For example, if there is a covenant that has been breached in your lease, your landlord could terminate your lease.
Those with the right to take action against you for breach of the covenant should first contact you and ask you to put things right. However, if the breach has caused a financial loss or a severe annoyance, they can also ask for compensation. If you cannot amicably resolve the issue, the court could be asked to order an injunction against you or award damages to the affected party.
What to Do if You’re a Seller Who Has Breached a Restrictive Covenant
In this circumstance, it would be wise to seek legal help as soon as possible.
However, your conveyancer can check that the relevant restrictive covenants are recorded on the land charges register and that the wording is clear, correct and therefore enforceable. They will then likely research options for insurance to cover the liability of any further breaches.
One option could be Restrictive Covenant Indemnity Insurance which can only be obtained when a covenant has been breached for at least 12 months without complaint. This insurance once gained, can usually be passed onto future owners.
For further information, you should seek legal help or speak to your conveyancer who can inform you of certain indemnity insurance policies. The cost of these policies will vary and can often depend on the number of covenants breached and the level of enforcement risk.
What is Restrictive Covenant Indemnity Insurance?
Depending on the individual case and its circumstances, restrictive covenant indemnity insurance could be arranged for the development or alteration of a property that is in breach of restrictive covenants. For many developers, arranging restrictive covenant indemnity insurance has become a routine part of the acquisition of a site.
It can often provide protection against financial losses should the enforcement or attempted enforcement of a potential breach be introduced. If you arrange cover before the planning costs have incurred, you may receive a drafted policy that includes cover for wasted planning costs should enforcement action emerge to halt the development of work that required planning permission.
However, typically, restrictive covenant indemnity insurance can only be obtained when a covenant has been breached for at least 12 months without complaints. But it can usually be passed onto future owners of the land or property covered.
Before deciding to take out legal indemnity insurance, you should first thoroughly read the details of the covenant to ensure there are no other options that could provide a solution to your issue. Purchasing an insurance policy of this type will be more beneficial to a landowner who is unable to trace or contact the owner of the restrictive covenant and so cannot remove it. It will also help if the paperwork describing the covenant has been lost, making it difficult to establish.
For further information about this type of insurance, it would be wise to seek legal advice or to speak to your conveyancing solicitor. The costs of these types of policies will vary, often depending on the number of restrictive covenants breached as well as the level of enforcement risk.
How Much Does it Cost to Remove a Restrictive Covenant?
If you cannot obtain an insurance policy, then you must try getting consent from the person with the benefit of covenant to start any work you have planned. If you can’t find this person, if they refuse permission, seek compensation or charge a fee, then under the Law of Property Act 1925, you can apply to the Lands Chamber of the Upper Tribunal to discharge or modify the covenant.
The cost of removing a restrictive covenant can vary greatly depending on the property in question and the circumstances surrounding it. There is no guaranteed price due to the varying legal fees you’ll have to take into account. It is often a very costly and time-consuming process with no guarantee of success. Even if you are successful with your case, you will likely still be required to cover the legal fees of the beneficiaries of the covenant.
To successfully remove the covenant, you must show one or more of the following criteria:
- That the restrictive covenant has become out-dated or obsolete due to a change of the neighbourhood or property.
- That the covenant would hinder the use of the land for reasonable purposes.
- That the beneficiary has approved and agreed of the discharge or modification of the covenant.
- That the proposed action wouldn’t injure the beneficiary.
Handling Restrictive Covenants When Doing Home Improvements
It’s not recommended to continue with any home improvement that breaches a restrictive covenant. It’s extremely risky and you could be forced to undo the work and even pay compensation.
In most situations, you will have to get consent from the original developer, the Local Authority or the freeholder if the property is leasehold. This consent must be granted before work begins otherwise you’re risking the possibility of legal action being taken against you. This will likely delay the process but is vital if you wish to start the work you have planned.
Don’t forget to check the deeds with your conveyancer before work begins to ensure you’re receiving the necessary consent to allow you to continue. Some restrictive covenants may even have clauses that will allow certain alterations.
If you feel any covenants are unreasonable, you can apply to the Lands Chamber of the Upper Tribunal to modify or remove it. This can be costly but it’s a viable option for those looking to do home improvements on a property with restrictive covenants.
What Happens if a Restrictive Covenant Wasn’t Pointed Out?
As it’s your solicitor’s responsibility to highlight any restrictive covenants imposed on the property, you’re within your right to make a complaint to the Legal Ombudsman if they miss one. If they are a member of the Solicitors Regulation Authority, you can also contact them. Covenants can greatly affect your time living in the property as well as its future sale so it’s important they are accurately explained to you.
After you’ve made the complaint, the solicitor may be forced to pay compensation. However, the Legal Ombudsman can only award up to £50,000.
Save Time and Money With Compare My Move Today
It’s always important to be prepared when buying a house and to organise everything you’ll need to begin the process. One way to ensure you save both time and money is to compare quotes and to plan your conveyancing, surveying and home removals with Compare My Move.
Our simple online forms can help you compare quotes in your local area and connect you with verified and experienced professionals. Once you’ve found the conveyancer for you, you can then discuss any restrictive covenants that are on the property you’re interested in.