When you buy a property, you’re likely to hear a lot of legal terms that you’re not overly familiar with. One such phrase might be ‘restrictive covenants’.
If a restrictive covenant has been mentioned during the conveyancing process, you’re likely to have some questions. What is a restrictive covenant? What impact does it have on a property and its owner? Should you consider buying a property with one?
Keep reading to find out everything you need to know.
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A restrictive covenant is a legal agreement that limits permitted activity or restricts you from doing something.
They are common in both property law and employment law.
You may also hear the term ‘positive covenant’. This is similar to a restrictive covenant, but instead of legally requiring you not to do something, it requires you to do something. An example of a positive covenant might be that you are required to contribute a certain amount each year for the maintenance of shared access.
Restrictive covenants on properties are private legal agreements that outline restrictions you must adhere to as the property owner.
The covenants are made between the property owner and the original landowner or developer. They are often put into place when land or property is first sold and aim to protect the original landowner. This means some restrictive covenants date back hundreds of years. They will pass down from owner to owner and stay with the house. This is known as ‘running with the land’.
Yes, restrictive covenants are a legally binding agreement. Breaching a covenant can have serious consequences.
Any covenants will be found as part of the conveyancing process when buying a property.
You can also check for any covenants and easements directly by doing a ‘title search’ on the Land Registry website.
You will be able to see whether there are any covenants for free, but you will need to pay a small fee to access the property title and see the full details.
You can find a wealth of property information – including details of any covenants – by entering the property postcode on the Land Registry website.
Common restrictive covenants include:
Because many property covenants are hundreds of years old, you may also come across some rather unusual historical examples. These may include things like:
Common freehold restrictions include not running a business from home, the maintenance of boundary fences and hedges, and guidance about the exterior appearance of your property.
Common covenants for leasehold properties often relate to shared spaces. This may include rules to prevent the obstruction of shared areas or access routes, maintenance of shared spaces, and rules around subletting.
Breaching restrictive covenants on a leasehold property can (in extreme cases) lead to the lease being forfeited, so it’s important to read any covenants and ensure you have a thorough understanding of your obligations before you purchase the property.
Restrictive covenants are also common in new build developments. They are usually put in place to protect the aesthetic of the development and property values.
Common examples of new build covenants include:
Restrictive covenants for freehold properties last until they are legally removed. Leasehold property restrictive covenants last for the lease period.
If the restrictive covenant relates to a leasehold property, the covenant will expire when the lease expires.
Restrictive covenants on freehold properties will only expire when they are legally ended.
Yes, restrictive covenants are enforceable, as long as certain criteria are met.
Yes, they are. The age of the covenant doesn’t matter, as long as the above criteria can be met.
Restrictive covenants are private legal agreements between two parties. This means that enforcement is the responsibility of the benefitting party (the party who made the original covenant with the property owner or previous property owner). This is likely to be the original landowner (or the person the land has passed to) or the freeholder in a leasehold property.
No, the benefitting party is the only person who can enforce the covenant. The benefitting party can seek legal representation, but they must initiate and enforce the challenge themselves.
A neighbour can enforce restrictive covenants if their property is the benefitting party. This may be the case if your property is built on land that previously belonged to the neighbouring property or if your property is a leasehold property within a block of flats, for example.
If there is a breach of restrictive covenants, the benefitting party can take steps to enforce them. This would initially mean reminding the person who has breached the covenant of what it entails and explaining in what way they believe it has be breached.
Breaching a restrictive covenant is a legal matter and should be taken seriously.
If a resolution cannot be found, you may want to seek mediation. If this is not successful, the next option would be to take legal action.
Restrictive covenants are legally binding. This means it’s important that you have a thorough understanding of what would be required of you before you move ahead with purchasing the property.
Covenants can put some cautious buyers off, which may limit your pool of potential buyers. They are common though, especially with older properties, and as long as you get legal advice and adhere to the restrictions, they shouldn’t be anything to worry about.
If you’re nervous about restrictive covenants, you can purchase an indemnity policy.
Many restrictive covenants are historic. This can make it difficult to know whether the covenant is still relevant and who the benefitting party/covenant enforcer would be. Indemnity insurance can be a good option in this scenario, as it will protect you from the potential financial losses associated with any covenant enforcement.
Restrictive covenant insurance may be an appealing option when buying or selling a property. If you’re buying a property with covenants, an indemnity policy will protect you from any historic intentional or unintentional breaches. If you’re selling a property, you can buy an indemnity policy to help reassure potential buyers by limiting their liability.
Indemnity insurance costs will vary. Factors that may affect the cost include the age, location and value of your property, the nature of the covenant and the potential cost to rectify any breach.
Typically, you can expect to pay £100-£500. This is usually a one-off cost and the policy should be transferable to future buyers.
Although both are related to legal agreements and property law, restrictive covenants and easements are quite different. A restrictive covenant prevents you from doing something relating to your property or land. An easement gives others a legal right to access your property. Easements will usually relate to maintenance issues or a legal right of way.
How much it costs to enforce a restrictive covenant will depend on how receptive the party is to enforcement and whether legal services are required.
The best-case scenario is that both parties are communicative and the issue gets resolved without any need for legal intervention.
The worst-case scenario is that legal action is required. This can cost anything from a few thousand pounds to tens of thousands of pounds. For this reason, it’s advisable to avoid taking restrictive covenant breaches to court if possible.
Yes, you may be able to get a covenant amended. To do this, you will need to apply to the Upper Tribunal under section 84 of the Law of Property Act 1925.
The process for doing this is outlined on the government website.
It may be possible to remove a restrictive covenant under certain circumstances.
There are generally two routes for this – voluntary deed of release or Upper Tribunal ruling.
The easiest way to remove a restrictive covenant is to identify the benefitting party and negotiate the removal. If you can agree terms, you can get a deed of release drawn up by a solicitor to document the removal.
You can apply to the Upper Tribunal to have the restrictive covenant removed if you cannot contact the benefitting party or if the benefitting party refuse a reasonable request to remove it.
If you are successful in acquiring a deed of release, you will need to notify Land Registry. Land Registry can then update your property title deed and ensure the restrictive covenant is removed. If you don’t notify Land Registry, the covenant will still show on your title deed, which could cause problems when you come to sell.
How much it costs to remove a covenant will depend on how complex the process is. If you can negotiate a deed of release with the benefitting party, the cost will be kept to a minimum. Legal costs may range from £100 to around £1000, depending on the complexity of the negotiations. Land Registry fees will then cost an additional £20-£40.
If you need to go down the route of applying to the Upper Tribunal or taking the other party to court, you are likely to be looking at a bill of several thousand pounds.
No. Restrictive covenants are private legal agreements between two parties. Planning permission relates to local planning authority permission regarding the development of land or properties. The two are very separate. If you get planning permission for work that would breach a restrictive covenant, you still need permission from the other party in the covenant before proceeding. Not getting permission from the other party could result in legal action being taken against you for a breach of the restriction covenant.
If there is a covenant on your property that you’re concerned about or you’re considering buying a property with a restrictive covenant, please ensure you seek independent legal advice.
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