Restrictive covenants in property law are a type of private planning agreement. They are often imposed on a piece of land ('the new plot') when it is sold off from a larger plot ('the retained land').
Typically a restrictive covenant will prevent, or restrict, what can be done on the new plot. A restriction might prevent any development at all, or restrict the number of properties which can be built on the new plot, or the use of the new plot, for example. Restrictive covenants are valuable and important because once they exist they will bind the new plot even if it is subsequently bought and sold.
The recent case of HAE Developments Limited v The Croft Ealing Ltd and others is all about how a developer which has acquired a new plot overcame a restrictive covenant.
The law about how restrictive covenants are created, and whether they are enforceable, is complicated. However, what is clear is that even once the covenant is in place there is a well-established process for asking a Tribunal to consider whether the covenant should be modified or even completely removed. That legal right was created by the section 84 of the Law of Property Act 1925. In the HAE Developments case developers used s84 to overcome a restriction on development.
HAE Developments
HAE owned land in Ealing on which there is one property. HAE’s land was the ‘new plot’, and had been sold off from ‘the retained land’ in 1955. When the sale off took place a covenant was imposed on the new plot restricting its use to a single dwelling house, and preventing any uses which would cause a nuisance of annoyance to the owners of the retained land. At that time the retained land was a substantial Victorian residence in extensive grounds.
At some time thereafter the retained land was itself redeveloped and blocks of flats were built on it.
HAE obtained planning permission to construct eight flats on the new plot. It then applied to the Lands Tribunal (a specialist property court) for the 1955 restrictive covenants to be discharged. The owners of the flats on the retained land objected.
Decision
HAE secured the removal of the restrictive covenant on two grounds allowed by s84, namely that:
- As the nature of the neighbour had now fundamentally changed (ie neighbouring properties were mainly flats) the covenant was obsolete.
- As HAE had secured planning permission, (which carried with it the inference that the intended use of the new plot (for flats) was reasonable), the Tribunal could review whether the covenant secured any benefits to the owners of the retained land. The Tribunal decided that it did not.
Lessons
The HAE decision is an important reminder of a two key aspects of the law surrounding the removal of restrictive covenants:
- A neighbouring objector to a development must show some practical benefit secured by a restrictive covenant (i.e. to prevent overlooking, or noise nuisance) for it to be enforceable. It is not enough for an objector simply to claim that the existence of the restrictive covenant is the thing of value by being able to hold a developer to ransom.
- Objectors will have a particularly weak (or weaker) case where they wish to stop a type of development which has already been carried out on their own land. The tribunal went as far as to say… ‘We are entirely unimpressed by the idea that flats in the adjoining property [i.e. the new plot] are somehow more objectionable than the flats contiguous to one’s own…’
All restrictive covenant cases depend upon the particular facts including the nature of the relevant area and what development is intended, so specific advice should be taken in relation to any individual development proposals. ,
Russell-Cooke's property litigation team can assist with any queries you may have.