What is a Restrictive Covenant?

When purchasing or selling a property in the UK, you may encounter the term restrictive covenant. While it may sound like complex legal jargon, restrictive covenants play a significant role in property ownership and use.

These covenants are common in conveyancing and can limit what you can and cannot do with your property.

This guide will help you understand what a restrictive covenant is, why it matters, and what to do if you encounter one in a property transaction.

What is a Restrictive Covenant?

A restrictive covenant is a legally binding agreement that limits how a property can be used. Unlike positive covenants, which require the property owner to perform certain actions, restrictive covenants are about preventing certain activities or developments on the land.

Restrictive covenants are typically placed on a property by a previous owner, a developer, or an adjacent landowner to protect their interests. These covenants are registered with the Land Registry and apply to all future owners of the property, meaning that if you purchase a property with a restrictive covenant, you are bound by its terms.

How Does a Restrictive Covenant Differ from a Positive Covenant?

Understanding the distinction between restrictive and positive covenants is crucial in property law.

• Restrictive Covenants: These covenants prevent the owner from doing something specific with their land or property. For example, a restrictive covenant might prohibit you from using the property for commercial purposes or constructing a building higher than a certain height. The key point is that restrictive covenants are negative in nature - they prevent actions from being taken.

• Positive Covenants: In contrast, positive covenants require the owner to actively perform certain tasks, such as maintaining a shared fence or contributing to communal areas' upkeep. Positive covenants often require a separate legal agreement to ensure that future owners are bound by them, whereas restrictive covenants are automatically passed on with the property.

Why are Restrictive Covenants Important?

Restrictive covenants are important because they impose legal obligations on property owners that could affect how you use or modify the property. For example, if a restrictive covenant prohibits commercial use of the land, you won’t be able to run a business from home or lease the property for business purposes without breaching the covenant.

These covenants often serve to protect the character of a neighbourhood, maintain property values, or prevent activities that could negatively affect the surrounding area. For instance, developers might impose restrictive covenants on a new housing estate to ensure that no owner builds extensions that would overshadow their neighbours or alter the uniform look of the development.

Restrictive covenants are also used to prevent disputes between neighbouring landowners. For example, a covenant might prevent a homeowner from building a structure that blocks a neighbour’s view or access to sunlight.

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Do Restrictive Covenants Apply to Future Owners?

One of the most important aspects of restrictive covenants is that they "run with the land". This means they automatically transfer to future owners when the property is sold. As long as the covenant is properly registered with the Land Registry, all subsequent owners will be bound by its terms.

For example, if a covenant prevents building any additional structures on the land, this restriction will apply to all future owners of the property, not just the person who agreed to the covenant initially.

This is why it’s crucial to be aware of any restrictive covenants on a property before you purchase it, as they can significantly limit what you can do with the property.

Examples of Restrictive Covenants

Restrictive covenants can vary widely depending on the nature of the property and the reasons for the covenant’s creation. Below are some common examples of restrictive covenants:

1. No Commercial Use: One of the most common restrictive covenants prohibits the use of the property for commercial purposes. This can prevent you from running a business from home, renting the property for business use, or building commercial facilities on the land.
2. Building Restrictions: Another common example is a restriction on the type or height of structures that can be built on the land. For instance, a restrictive covenant might limit any new construction to single-storey buildings, or it might prevent extensions or alterations that exceed a certain height.
3. No Subdivision: Some covenants prevent the subdivision of a property into multiple units or lots. This is often used to maintain the character of a residential area or prevent overcrowding.
4. No Nuisances: A restrictive covenant might prohibit activities that could be considered a nuisance to neighbours, such as loud noise, excessive traffic, or foul odours.
5. Protection of Green Spaces: In some cases, restrictive covenants are used to protect natural features such as trees, woodland, or open spaces. For example, a covenant might prevent the cutting down of certain trees or the development of a garden into a paved area.

How Are Restrictive Covenants Enforced?

Restrictive covenants are legally enforceable agreements, meaning that if you breach one, the party benefiting from the covenant (often a neighbour or developer) has the right to take legal action against you. The most common ways restrictive covenants are enforced include:

• Injunctions: The party benefiting from the covenant can apply for an injunction to prevent you from breaching the covenant. For example, if you start building an extension that violates a building restriction, they could seek an injunction to stop the construction.

• Damages: In some cases, the benefiting party may seek financial compensation (damages) for the breach of a restrictive covenant. This is typically sought if the breach has caused them some form of loss, such as a decrease in property value.

• Specific Performance: A court may order you to undo the action that breached the covenant. For example, if you built a structure that violates the covenant, the court might order you to remove it.

It’s important to note that even if a restrictive covenant was imposed many years ago, it can still be enforceable. However, enforcing a covenant can sometimes be difficult if the benefiting party cannot be identified or if the covenant has become obsolete over time.

Can Restrictive Covenants Be Removed or Modified?

Yes, restrictive covenants can sometimes be removed or modified, but this typically requires the agreement of the party benefiting from the covenant. There are a few ways this can be achieved:

• Negotiation: You can approach the party benefiting from the covenant and negotiate its removal or modification. For example, if you want to build an extension that violates a height restriction, you could offer to make a payment or other concessions in exchange for their agreement.

• Legal Release: If the benefiting party agrees, a legal document called a Deed of Release can be created to formally remove the covenant from the property.

• Tribunal Application: In some cases, if the covenant is deemed to be outdated or no longer serves a useful purpose, you may be able to apply to the Lands Tribunal (now part of the Upper Tribunal) for its removal or modification.

It’s essential to seek legal advice before attempting to remove or modify a restrictive covenant, as the process can be complicated and requires careful negotiation.

How Long Does a Restrictive Covenant Last?

Restrictive covenants can last indefinitely unless a specific time limit is mentioned in the original agreement. Even if a covenant is very old, it can still apply if it is registered with the Land Registry. However, in some cases, the covenant may become obsolete due to changes in the property or surrounding area.

For instance, if the area around a property has been developed for commercial use, a covenant restricting commercial activities may no longer be relevant. In such cases, you could apply to have the covenant removed or modified.

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What Happens if You Breach a Restrictive Covenant?

If you breach a restrictive covenant, the consequences can be severe. The party benefiting from the covenant can take legal action against you, potentially resulting in:

• Injunctions: As mentioned earlier, the court can issue an injunction to stop the activity that breaches the covenant.
• Damages: You may be required to pay damages to compensate the benefiting party for any loss caused by the breach.
• Specific Performance: The court could order you to take corrective action, such as tearing down a structure built in violation of the covenant.

The best way to avoid these penalties is to ensure that you fully understand any restrictive covenants attached to your property and comply with them. If you are unsure about your obligations, it’s always advisable to seek legal advice.

Conclusion: Why Restrictive Covenants Matter in Property Transactions

Restrictive covenants are an essential part of property law in the UK and can significantly impact how you use and develop your land. Whether you are buying, selling, or modifying a property, it’s important to understand any restrictive covenants attached to it and how they might affect your plans.

By ensuring that you are fully aware of any covenants before completing a property transaction, you can avoid legal disputes, costly mistakes, and potential penalties. Always consult a conveyancing solicitor if you need clarification on the terms of a restrictive covenant and what it means for your property.

With proper understanding and legal advice, you can navigate the complexities of restrictive covenants and ensure your property use remains compliant with the law.