Restrictive Covenants – How They Affect A Property

Restrictive Covenants – How They Affect A Property

by Caleb James on 20 Jun, 2012

Restrictive covenants are placed on a property to prevent future buyers doing or not doing something to the property or the land it is built on. They are commonly found on new housing estates where the developer is keen to maintain the appearance of the properties they have just built. However, a land owner can put any restrictive covenant they like on the land and property they are selling, provided this is reasonable and within the law.

It is important to understand how any restrictive covenant on a property you are buying will affect how you can use and develop the land now and in the future, and how the conveyancing process will be affected.

Common restrictive covenants include:
• Not causing a nuisance to your neighbours
• Not trading or running a business from the property or its land
• Only keeping domestic animals on the property
• Not constructing any buildings or other structures on the land
• Not changing the property’s external appearance.

In most cases, your conveyancing solicitor will only need to tell you that the covenant exists and advise on its legal implications. However, if you are likely to breach the restrictive covenant by how you plan to use or develop the property, your conveyancer should also advise you on how to indemnify yourself against liability.

A popular way of doing this is by purchasing Restrictive Covenant Indemnity Insurance, which can be passed on to future owners of the property. Sometimes, where the covenant was put in place by the original property developer and they have since gone out of business, the restrictions may no longer apply – your conveyancing solicitor will be able to advise you on this.

Other options are to seek the originator’s consent to breach the restrictive covenant, or to approach the Upper Tribunal (Lands Chamber) which has the power to change or revoke a restrictive covenant in some circumstances. However, these options can be time-consuming and expensive.

Because of the legal implications of breaching a restrictive covenant, you should take expert advice on the exact nature of the covenant that applies to the land and property you want to buy. A professional conveyancing service will be able to explain the restrictions and the actions you should take to protect yourself against liability.

About the Author

Caleb James

Caleb James is a financial advisor and journalist, who contributes regularly to financial blogs and industry publications.