The documentation that surrounds property transactions can sometimes be confusing. With many forms to fill out and hoops to jump through, it’s natural to feel overwhelmed.
In recent years, we have received plenty of questions about restrictive covenants. This is an important subject when it comes to buying or selling a house/land, so it is important that you understand what the phrase means and how it might affect you.
Keep reading our blog below for a clear overview of restrictive covenants in the UK. We’ve provided all the information you need.
What is a restrictive covenant?
A restrictive covenant is a contract between two parties in which one promises not to carry out certain acts on their land.
This can happen if someone buys land from another person, but the seller wants to guarantee that certain things will not happen. Some common examples of this include:
- Preventing businesses from operating on the land
- Making it illegal to alter an existing property (e.g. a manor that is centuries old)
- Stopping new ‘substantial structures’ from being built on the land, such as a new block of flats
Alternatively, you may also see the phrase ‘restrictive covenant’ between a landlord and a leaseholder. This is when the person owning the building forbids certain practices, such as keeping pets, subletting the property, removing walls, or running a business from the apartment.
Restrictive covenants are usually designed to maintain a certain standard of living for everyone in the area. When buying a property, your conveyancer should check the title deeds to see if any restrictive covenants apply.
It is commonly thought that restrictive covenants only apply to new build properties, but this is untrue.
Can you remove a restrictive covenant?
Yes, getting a restrictive covenant altered or removed is technically possible. However, this may take quite a long time, so you should be prepared for an ongoing battle.
Firstly, you can negotiate directly with the party that has implemented the covenant. Finding out if there is any ‘wriggle room’ may fix the problem you’re facing.
As a second option, you could apply to the Upper Tribunal of the Lands Chamber and explain why you think the restrictive covenant is unreasonable. During this process, you would be best suited to having a legal expert by your side.
Another solution is to take out insurance against enforcement of restrictive covenants. This method is more common than you think.
You can find legal firms with extensive experience getting restrictive covenants altered and/or removed with any of these options. You should seek assistance since it is not often a straightforward process.
How might a restrictive covenant affect my house sale?
Depending on the severity of the restrictive covenant and how easily it could be altered/overturned, you may find that the limitations turn a few potential buyers away. Alternatively, they may drastically reduce their offer to you as a consequence. This all depends on the buyer and the nature of the restrictive covenant.
Legal disputes surrounding restrictive covenants can become notoriously complicated. Therefore, if a potential buyer learns that things are still ‘up in the air’, they are more likely to step away completely to avoid any potential hassle, building work or fines.
If you cannot find anyone on the open market willing to buy your house, you may be able to sell your property to a cash house buyer. While this will decrease the selling price of your house, it can also guarantee that a sale goes ahead. This assurance can be vital if you are on a tight schedule or operating within a chain.
What happens if someone breaches a restrictive covenant?
If you break a restrictive covenant, you may be forced to undo the offending action or pay a fine. In the former scenario, this could involve destroying an extension built on a property or getting rid of a pet not allowed to be there. Sometimes, you may even face legal action for breaking a restrictive covenant.
You should generally get legal advice before breaching a restrictive covenant – even if you have already done so and have got away with it thus far. Sometimes, this can come back to bite you further down the line, so taking out insurance or getting legal guidance could be a smart decision.
What if I have broken a restrictive covenant by accident?
If your conveyancer has not warned you about any restrictive covenants during the house-buying process, then you can take action against them for this. Alternatively, if you were aware of the covenant but still breached it by accident, you may need to undo it or pay a fine. You should seek legal support if you are going to make your breach of covenant known since this is a complicated area that may result in hefty fines or worse.
What is restrictive covenant insurance?
If you have breached a restrictive covenant, and more than 12 months have passed without anyone noticing/complaining about it, you can take out insurance.
The cost of this insurance will be impacted by the perceived level of risk and the quantity of covenants you have breached.
Can I take action against my solicitor if they missed a restrictive covenant?
Yes, you can complain to the Legal Ombudsman if your solicitor has failed to outline any restrictive covenants. Since this is their job, you are within your rights to make a claim, but you can only be awarded up to £50,000 as compensation.
Can I find out if there are restrictive covenants on my current house?
If you already own a property but want to learn if any restrictive covenants apply, it’s not too late to do so.
If the land is registered with the Land Registry, you can check the Land Charges Register of the title document. If you are unsure about any parts of the information, sit down with a solicitor who can explain it.
If your land is unregistered, then the mortgage company should hold the Title Deeds, which can provide information about the property, including (hopefully) any restrictive covenants that apply. If there is no mortgage on your house, then speak to your solicitor, who can point you in the right direction to find the answer you need.
What if I find out my landlord is breaking a restrictive covenant?
If you are a tenant in a building or a leaseholder who owns your flat, you may discover that your landlord/the freeholder is breaking a restrictive covenant.
For example, plenty of buildings limit the number of tenants living there, but the owner may be breaching this. Alternatively, some restrictive covenants prevent the owner from extending the building, but your landlord may have done so anyway.
In this situation, you should speak to a lawyer or solicitor who can advise you on the best route forward. This usually involves reporting them to an official body and potentially seeking compensation.
