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A recent Upper Tribunal decision has highlighted the circumstances in which restrictive covenants can be modified, potentially opening the door for property owners seeking to redevelop land that has long been subject to building restrictions.
The case serves as an important reminder for homeowners, developers and landowners that restrictive covenants, while often decades old, are not always set in stone.
What Is a Restrictive Covenant?
Restrictive covenants are legal obligations attached to land that limit how a property can be used or developed. They are commonly encountered during property purchases and can affect everything from extensions and new-build developments to business use of residential property.
In this case, a restrictive covenant dating back to 1987 prohibited any further building on a plot of land containing a small partly thatched cottage.
However, after the cottage was severely damaged by fire in 2007 and much of it was demolished, the landowner sought permission to build an additional dwelling on the site.
A Long-Running Property Dispute
The landowner made three separate applications to the Upper Tribunal under Section 84 of the Law of Property Act 1925, seeking to modify the covenant.
The first two applications were successfully opposed by neighbouring homeowners who relied on the covenant to protect the privacy and peaceful enjoyment of their property.
Having purchased their home in 2014 with knowledge of the covenant, the neighbours argued that allowing two houses on the adjoining land would significantly increase activity, reduce privacy and alter the character of their secluded garden.
Balancing Development Rights and Neighbouring Interests
The Tribunal carefully considered the proposed development.
One of the new homes would be a modest single-storey property screened by a two-metre fence, while the second dwelling was designed to address concerns raised in previous applications regarding size, proximity and visual impact.
Importantly, the Tribunal noted that the neighbours' garden was already bordered by other residential properties on two sides without any apparent impact on their enjoyment of the land.
Whilst acknowledging that the proposed development would be noticeable and unwelcome from the neighbours' perspective, the Tribunal concluded that the impact would not be sufficiently serious to justify maintaining the covenant unchanged.
Can Restrictive Covenants Be Removed?
Under Section 84 of the Law of Property Act 1925, the Upper Tribunal has the power to discharge or modify restrictive covenants where they prevent the reasonable use of land and where the benefits they provide are not of substantial value or advantage.
The Tribunal found that although the covenant did provide practical benefits to the neighbours, those benefits did not amount to a "substantial advantage" capable of preventing the proposed development.
The Tribunal estimated that the modification would reduce the value of the neighbouring property by approximately 7.5%, equivalent to £56,250.
Compensation Awarded to Neighbours
While the landowner succeeded in obtaining modification of the restrictive covenant, the Tribunal also recognised that the neighbours would suffer some financial loss.
As a result, compensation of £56,250 was awarded to reflect the reduction in value of their property.
The decision demonstrates that even where restrictive covenants are modified, neighbouring property owners may still be entitled to compensation if they suffer financial harm.
What Does This Mean for Property Owners?
This case illustrates that restrictive covenants are not always an insurmountable obstacle to development. Landowners seeking to maximise the potential of their property may be able to challenge outdated restrictions where they prevent reasonable use of the land.
However, each case will depend on its own facts, including the impact on neighbouring properties, the purpose of the covenant and whether compensation can adequately address any loss suffered.
Anyone considering extending, redeveloping or building on land affected by a restrictive covenant should seek specialist legal advice before proceeding. Likewise, homeowners concerned about neighbouring development should understand their rights and the protections available to them.
As this case shows, achieving the right balance between property development and protecting neighbouring interests remains a key consideration for the courts.