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A Guide to Restrictive Covenants

Restrictive covenants are legal obligations imposed in contracts or deeds that limit the use of land or property in various ways. These covenants can affect a property’s use, and the rights of the parties involved. In addition, as they are registered on the title, and can therefore run indefinitely, they can also lead to some rather outdated and nonsensical scenarios, particularly in relation to older properties.

Matters which would have seemed completely innocuous over a hundred years ago could cause problems now. For newer properties, restrictive covenants can be designed to uphold a particular standard across a development for all residents and property owners.

What Is A Restrictive Covenant?

A restrictive covenant places certain limitations or restrictions on the use, development, or activities related to a piece of land or property. They are used to protect the interests of other property owners and/or developers.

One significant milestone in the development of restrictive covenants was the case of Tulk v. Moxhay 41 E.R. 1143 (22 December 1848). It is a landmark decision, not just in law but in the history of London, because if the Court had ruled differently, Leicester Square as we know it would not exist. Happily, (for movie premier lovers at least!) the Court recognised the enforceability of covenants that ran with the land.

The case established the principle that subsequent owners of land could be bound by restrictive covenants made by their predecessors, provided certain conditions were met.

What Makes A Restrictive Covenant Enforceable?

The following must be present for a restrictive covenant to be enforceable:

• The original parties involved must have intended the covenant to be binding and enforceable. This intention should be clear from the language used in the contract or deed.
• The covenant must relate to the land in question and significantly affect its use, value, or enjoyment.
• There must be privity of estate between the parties, which means that the covenant must “run with the land.” This ensures that subsequent owners are bound by the covenant.
• For a subsequent owner to be bound by a restrictive covenant, they must have had notice of the covenant’s existence. Notice can be actual, constructive, or imputed.
• Courts may refuse to enforce a restrictive covenant if it is found to be unreasonable or against public policy.

How Are Restrictive Covenants Applied To New Build Properties?

Restrictive covenants in new build developments often aim to maintain the aesthetics and uniformity of the development. They may include provisions that restrict property owners from making significant changes to the exterior of their homes, such as altering the facade, installing non-approved fencing, or painting the property in a way that deviates from a specified colour palette.

Property uses which are sometimes restricted in new build developments include activities such as running a business from the premises, converting the property into a multi-unit dwelling without permission, or using it for industry.

In addition, some covenants may require property owners to maintain their homes and gardens to a certain standard. This can include keeping gardens in good condition, repairing damage promptly, and maintaining the property’s overall cleanliness. Restrictions may also be placed on the construction of outbuildings, such as sheds or garages, to ensure they do not negatively impact neighbouring properties or the overall aesthetics of the development.

Will A Restrictive Covenant Affect My Sale?

When it comes to new build developments, it can be seen that restrictive covenants can be beneficial. The prohibition from changing the outside of the property, for example, ensures that an attractive environment together with uniformity is achieved whilst properties are being bought and sold.

More commonly in older properties, where the covenant is often decades old, if the covenant is considered onerous or has been breached inadvertently remedies are available.

• Indemnity Insurance: If the beneficiary of the covenant cannot be identified, obtaining indemnity insurance can provide protection for both the current owner and future buyers against potential enforcement of the covenant. This insurance covers the costs associated with dealing with the covenant.
• Negotiating a Release or Variation: If the beneficiary of the covenant is known, negotiations can be initiated to secure a release or variation of the covenant. This involves altering the covenant’s terms or removing it entirely.
• Lands Tribunal Challenge: If you believe that the restrictive covenant no longer serves a practical purpose and meets the criteria outlined in section 84 of the Law of Property Act 1925, you have the option to challenge it through the Lands Tribunal. If successful, this process can lead to the removal or modification of the covenant, simplifying the property’s sale.

During the sale process, it is crucial to collaborate closely with a solicitor well-versed in property law who can provide expert guidance, whether it involves obtaining indemnity insurance, negotiating with the beneficiary, or pursuing legal action in the Lands Tribunal to remove or modify the covenant.

How Are Restrictive Covenants Enforced?

In recent years, the Courts have been inclined to take a more flexible approach to restrictive covenants, particularly when considering their reasonableness. The test of reasonableness often involves weighing the competing interests of the parties involved, balancing the benefit gained by the party seeking enforcement against the detriment suffered by the party in breach. Overly, restrictive covenants can hinder economic development and impede progress. Consequently, the Courts may refuse to enforce covenants that are deemed unreasonable or contrary to public policy.

The ancient law of restrictive covenants must strike a balance between protecting property rights and facilitating development and progress. Developers and property owners should take expert legal advice from a Residential Property Law Solicitor if they have any concerns regarding implementing or breaching restrictive covenants.

To discuss any of the points raised in this article, please contact Meera Malde or fill in the form below.

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Looking at the King’s Speech 2023 from a Property Perspective

This week’s King’s Speech has seen the UK government outline its legislative agenda for the forthcoming year-long session of Parliament. This is primarily focused on three priorities – economic growth, societal strengthening, and public safety.

In this article, we focus on the government’s proposals that may impact on the property sector. 

The Renters (Reform) Bill

The government remains committed to re-shaping the landlord/tenant relationship, although in an attempt to balance the landlords’ interest, the proposed abolition of the Section 21 Notice eviction procedure will be delayed until after the court system has been reformed. This will almost certainly take years to complete, effectively shelving the proposals for the foreseeable future.

The King’s Speech expressly recognises the need to also protect landlords, ensuring they benefit from reforms to enable them to regain possession of their properties when needed.

Minimum Energy Efficiency Standards

As already announced by the Prime Minister in September, the briefing notes to the King’s Speech confirm that the government will not take forward proposals to force private landlords to urgently undertake home improvements to meet a minimum Energy Performance Certificate rating of ‘C’ (having previously required this to be completed by 2025 for new tenancies and 2028 for existing tenancies).

The Leasehold and Freehold Reform Bill

The King’s Speech stated that the government will introduce a bill to i) make it cheaper and easier for leaseholders to purchase their freehold; and ii) tackle the exploitation of millions of homeowners through punitive service charges. These proposals build on those introduced by the Leasehold Reform (Ground Rents) Act 2022.

Consistent with the government’s previous communications, the main proposals are summarised below:

Ground rents and lease extensions

1. Caps to be introduced on ground rents in existing leases;
2. Lease extension procedure to be overhauled, making it more straightforward and cost-effective;
3. Lease extension term to increase from 90 years to 990 years; and
4. Removal of the current two-year ownership requirement before a leaseholder can request a lease extension.

Leaseholds

1. Save for exceptional circumstances, a blanket ban on the creation of leasehold houses;
2. Caps on certain landlord and managing agent fees when a leasehold property is sold;
3. Increased transparency in respect of service charges; and
4. Further empowerment of leaseholders to challenge freeholders over unfair practices.

Conclusion

Whilst the proposed legislative reforms promise much, it remains to be seen what can be achieved by the current government given a general election is scheduled to be held by no later than 28 January 2025.

To discuss any of the points raised in this article, please contact Daniel Blake or fill in the form below.

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Building Safety Act 2022: New Regulations For Higher-Risk Buildings

As most of you will know, in August 2023 the Government laid before Parliament several regulations designed to extensively update and change various sections of the Building Safety Act (BSA) 2022 as well as other building regulations.

These changes came into force over the weekend. We have all heard plenty about the intentions behind the new regulations in wake of the Grenfell tragedy and Dame Hackitt’s subsequent report, but what does this mean for you and your business in practice? This article provides a brief overview of the changes.

What Are The New Building Safety Regulations?

The new regulations are:

• Building (Approved Inspectors etc and Review of Decisions) (England) Regulations 2023 – amend the Building (Approved Inspectors etc) Regulations 2010. The amendments mean that the Building Safety Regulator will be the only building control authority for all higher-risk buildings (HRB).
• Building (Higher-Risk Buildings Procedures) (England) Regulations 2023 – provide the detail of the building control regime for HRBs during design and construction or when building work is being done to an existing HRB.
• Building Regulations etc (Amendment) (England) Regulations 2023 – amend the Building Regulations 2010 to support the new HRBs control regime. Extensive changes include Regulation 6, which inserts a new Part 2A “Dutyholders and competence” into the BR 2010.
• The Building Safety Act 2022 (Consequential Amendments etc) Regulations – make consequential amendments to various miscellaneous statutes and orders.

Alongside the tabling of the new regulations, the Government also published its response to the consultation on changes to the building control regime under the Building Safety Act 2022 (BSA 2022) and relevant regulations.

These changes focused on HRBs and with the Government emphasising that it intended to place additional requirements on all those working on such buildings.

What Are The Changes That Came Into Force On 1 October 2023?

Part 2A of the Building Regulations etc. (Amendment) (England) Regulations 2023 introduces new dutyholder and competence requirements for practitioners and clients. These apply to all works that are subject to the Building Regulations 2010. Clients are required to plan, manage, and monitor the project to ensure full compliance with the Building Regulations 2010. Designers and contractors should only be appointed once the client is fully satisfied that they meet the competency requirements.

For their part, designers and contractors , having considered the project, must be sure that they can satisfy the competency requirements before they accept the job. Principal designers and principal contractors who have an active co-ordinating role must meet additional requirements before being appointed or accepting an appointment.

To meet the competency requirements, an individual contractor or designer must have the skills, knowledge, experience, and behaviours necessary to fulfil their duties. Entities must have the organisational capability to undertake the project.

Although most of these requirements will have already been fulfilled by the parties, the amendments require the steps be documented so a detailed audit trail exists.

The Building Regulations etc. (Amendment) (England) Regulations 2023 Also Provide For:

• Amendments concerning the process for building control approval in respect of non-Higher-Risk Building works. This replaces the current “deposit of plans”;
• A more robust definition of “commencement” (which was previously only dealt with in guidance) and provision for the automatic lapse of building control approval after three years if works have not begun; and
• For building works where the Fire Safety Order applies, the provisions concerning fire safety information have been strengthened.

The changes around HRBs set out in the Building (Higher-Risk Buildings Procedures) (England) Regulations 2023 are in line with those featured in the consultation on which the Government has recently published its responses. They include:

• At Gateway 2 (building control application stage) and Gateway 3 (completion certificate stage), full details of the compliance documentation to be submitted must be provided.
• Certain changes to approved documents must be notified to the Building Safety Regulator (BSR). Major changes to the documents will require BSR approval.
• A mandatory safety reporting procedure for major incidents.
• A requirement to maintain a golden thread of information in an electronic facility incorporating all approved documents from Gateways 1 and 2, the change control log, any mandatory occurrence reports, any notified changes in the principal designer or principal contractor and a draft Gateway 3. An additional requirement is that this data must be capable of being transferred in a format which is uncorrupted, readable, and intelligible to intended recipients.

Timescales For Implementation?

Broadly speaking, the amendments to the Building Regulations 2010 and the Approved Inspectors Regulations 2010 will not apply to building work started or where an initial notice has been given to a local authority and was accepted or treated as accepted before 1 October 2023.

There are complex transitional provisions in relation to the Higher-Risk Buildings Procedures Regulations 2023 which are beyond the scope of this article. If you have any questions, please feel free to contact me.

Wrapping Up

Many of the questions relating to the changes to the building safety regime will only become apparent as the new provisions bed in.

However, we do expect Regulators and the Courts to take a hard line on any breaches, so it is vital that your business fully grasps the changes and implements policies and procedures to ensure compliance.

To discuss any of the points raised in this article, please contact Stephanie Houston or fill in the form below.

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