Property

What is a 'restrictive covenant'?

A ‘restrictive covenant’ is a private agreement that restricts the use of a piece of land for certain specific purposes. In basic terms, a covenant involves a landowner and a ‘beneficiary’ who directly benefits from the restrictions on the land and who can enforce the covenant if the landlord tries to break it. 

Unlike similar legal policies, a restrictive covenant applies specifically to the land rather than the parties involved. The covenant is seen as being necessary for retaining the value of the beneficiary’s property and it will continue to apply to the land in question even after it changes hands. Some covenants can be decades or even hundreds of years old!

Understandably, this can be a problem for landowners and developers. They could be prevented from making certain alterations to a property or using it for certain purposes. For example, they could be forbidden from building an extension if it would limit the beneficiary’s view, as this could directly impact the value of the beneficiary’s property. An active restrictive covenant will also apply to a property even if any proposed developments have Planning Permission.

If a current or prospective landowner believes that a restrictive covenant is unreasonable, there are certain ways that they can have it modified or ‘discharged’, though it is often a lengthy process and should not be pursued without professional help.

While trying to remove a restrictive covenant is a legal matter, an architectural designer, builder or other tradesman with experience in property development may be able to provide valuable advice on what your options will be. A local planning consultant will be able to advise you on whether you have a reasonable case for protesting the covenant and talk you through the application process.

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Is removing the covenant my only option?

If you are being blocked by a restrictive covenant, you do not necessarily have to protest and try to have it discharged. Another option is to purchase indemnity insurance for your development.

When a landowner breaches a restrictive covenant and a beneficiary moves in to enforce it, an indemnity insurance policy can provide cover for:

  • Damages and compensation
  • Alterations made to the landowner's property
  • The reduced value of the beneficiary's property

Property

How to resist a restrictive covenant

According to the law set out in the 1925 Law of Property Act and the Property Order of 1978 (N.Ireland), a current or prospective landowner can apply to have a covenant modified or discharged. The application must be submitted to the Lands Tribunal.

Something to keep in mind before considering an application is that even if it is successful, your costs will not be paid by the beneficiaries of the covenant. If their objection is successful, however, you may be forced to pay their costs.

For an application to be valid, it must contain all of the information specified by the above acts. This will include:

  • Proper identification of both the land that is subject to the restriction and the land that is subject to the benefits
  • Identity of any known or potential beneficiaries
  • A clear description of the applicant’s grounds for the discharge or modification
  • A copy of the document which originally created the restriction. This will include colour copies of any plans which were included with the original deal

If you find that the details of a covenant are unclear, you are able to apply to the Lands Tribunal for a declaration which will determine whether or not the restriction actually exists. If it does, the declaration will outline the nature of the restriction and whether it is enforceable.

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What will the Lands Tribunal consider?

If you make an application to have a covenant modified or discharged, the Lands Tribunal will take into account:

  • Whether there have been changes in the character of the property or neighbourhood since the covenant was created
  • Whether the continued existence of the covenant would restrict the reasonable use of the land for public or private purposes without any real practical benefits
  • If the proposed changes will not have an impact on the beneficiary
  • If the parties involved have negotiated for the release of the covenant
If a beneficiary knew about the breach in the covenant in advance and failed to make a proper objection, they could be said to have ‘tacitly acquiesced’. In general terms, this means that they have given their consent by not objecting.

Property

What will happen next?

When the Registrar receives an application, the first thing it will do is decide what notice of the application should be given to the covenant’s beneficiaries. 

Usually the applicant will be required to:

  • Provide notice for any beneficiaries that can be identified by name or address
  • Provide a ‘notice by advertisement’ to any other beneficiaries

It will be the applicant’s responsibility to make sure that the notice sets out the details of their application, including their reason for challenging the covenant.

The Lands Tribunal will require any beneficiaries that wish to object to submit a notice of objection and any claims for compensation within 28 days.

Depending on the Lands Tribunal’s decision, the applicant may be required to pay compensation to anyone who will suffer as a direct result of the changes to the covenant. This will be to make up for if the value of the beneficiary’s land decreased as a result of the restriction, or if they suffered disadvantages or losses as a result of the changes. However, an objector will only be entitled to one or the other, not both.