Test Case – The power of Restrictive Covenants
You may own a property outright (freehold is as good as outright as you can get in England) but that doesn’t mean you can do with it exactly as you choose – not if there are any restrictive covenants attached to it.
Restrictive covenants are binding conditions that are written into a property’s deeds or sale contract as you will see in the Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd case below.
They are set by a seller to determine what a new owner can or cannot do with the land or buildings in question, under particular circumstances. They can cover a wide range of issues, but the most common examples include preventing certain actions such as:
- the making of alterations to a property – for example, extending or converting a house into multi-occupied (HMO)
- building or erecting substantial structures on the land
- operating trades or businesses on the land
- the parking of commercial vehicles, caravans, boats, trailers.
- the keeping of chickens or other livestock
- the neglect of gardens etc.
Covenants are often designed to uphold certain standards or amenities for all residents. Developers and property management companies often add restrictive covenants to prevent owners from undertaking work or other practices which would change the uniformity or otherwise have a negative impact on a neighbourhood.
Covenants may also be applied to protect value, minimise damage and retain a degree of control by the seller.
A recent case, Alexander Devine Children’s Cancer Trust v Housing Solutions Ltd (6 November 2020) came before the Supreme Court for a judgement by Lord Burrows and with whom Lord Kerr, Lord Lloyd-Jones, Lord Kitchin and Lord Hamblen agreed.
This is the first case in which the highest court in the land (whether the House of Lords or Supreme Court) has been required to decide an appeal on section 84 of the Law of Property Act 1925. That section confers on the Upper Tribunal a power, in specified circumstances, to discharge or modify restrictive covenants affecting land.
The party in the dispute entitled to the benefit of a restrictive covenant, preventing the development of an area of open land, was the Alexander Devine Children’s Cancer Trust. The party seeking a discharge or modification of the restrictive covenant under section 84 of the 1925 Act was Housing Solutions Ltd which is a property company concerned with the provision of affordable housing.
Housing Solutions Ltd the developer owned the land which was subject to the restrictive covenant.
The covenant was in favour of the adjoining children’s hospice owned by the Trust, that stipulated that the land could only be used as a car park. The covenant was to ensure that the hospice remained private and was not overlooked for the sake of the children.
However, in full knowledge of the covenant and of its breach, the developer nevertheless went ahead and built 13 affordable homes. It then applied to modify the covenant under section 84 of the Law of Property Act 1925 to permit in retrospect the new development on the covenanted land.
Although the affordable housing development was deemed to be in the public’s interest, and the developer had obtained planning permission for the affordable housing, the Supreme Court held that all this did not outweigh the hospice’s contractual rights.
The court refused the application to modify the covenant – the Supreme Court reasoned that a developer should not be entitled to rely on its own unlawful conduct as a justification for the modification of a covenant.
This case demonstrates the narrowness of the ‘public interest’ test. Lord Burrows in his judgement did not place any greater weight on the fact that planning permission had been granted. The ‘public interest’ and the waste of so many dwellings was “overpowered” by the fact that the houses need not have been erected, and the contractual rights of the respondent.
This result, and the likely demolition of the affordable homes, puts out a wake-up call to anyone who thinks that covenants may be antiquated and of no account in today’s dealings. The case confirms the continuing relevance of contract law restrictions on the development of land, to be ignored by property developers, and any subsequent purchasers at their peril.
Alexander Devine Children’s Cancer Trust (Respondent) v Housing Solutions Ltd (Appellant)
You Tube Summary by Lord Burrows https://youtu.be/sjo3BlKtX8I
©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Test Case – The power of Restrictive Covenants | LandlordZONE.
View Full Article: Test Case – The power of Restrictive Covenants
Post comment
Categories
- Landlords (19)
- Real Estate (9)
- Renewables & Green Issues (1)
- Rental Property Investment (1)
- Tenants (21)
- Uncategorized (11,916)
Archives
- December 2024 (43)
- November 2024 (64)
- October 2024 (82)
- September 2024 (69)
- August 2024 (55)
- July 2024 (64)
- June 2024 (54)
- May 2024 (73)
- April 2024 (59)
- March 2024 (49)
- February 2024 (57)
- January 2024 (58)
- December 2023 (56)
- November 2023 (59)
- October 2023 (67)
- September 2023 (136)
- August 2023 (131)
- July 2023 (129)
- June 2023 (128)
- May 2023 (140)
- April 2023 (121)
- March 2023 (168)
- February 2023 (155)
- January 2023 (152)
- December 2022 (136)
- November 2022 (158)
- October 2022 (146)
- September 2022 (148)
- August 2022 (169)
- July 2022 (124)
- June 2022 (124)
- May 2022 (130)
- April 2022 (116)
- March 2022 (155)
- February 2022 (124)
- January 2022 (120)
- December 2021 (117)
- November 2021 (139)
- October 2021 (130)
- September 2021 (138)
- August 2021 (110)
- July 2021 (110)
- June 2021 (60)
- May 2021 (127)
- April 2021 (122)
- March 2021 (156)
- February 2021 (154)
- January 2021 (133)
- December 2020 (126)
- November 2020 (159)
- October 2020 (169)
- September 2020 (181)
- August 2020 (147)
- July 2020 (172)
- June 2020 (158)
- May 2020 (177)
- April 2020 (188)
- March 2020 (234)
- February 2020 (212)
- January 2020 (164)
- December 2019 (107)
- November 2019 (131)
- October 2019 (145)
- September 2019 (123)
- August 2019 (112)
- July 2019 (93)
- June 2019 (82)
- May 2019 (94)
- April 2019 (88)
- March 2019 (78)
- February 2019 (77)
- January 2019 (71)
- December 2018 (37)
- November 2018 (85)
- October 2018 (108)
- September 2018 (110)
- August 2018 (135)
- July 2018 (140)
- June 2018 (118)
- May 2018 (113)
- April 2018 (64)
- March 2018 (96)
- February 2018 (82)
- January 2018 (92)
- December 2017 (62)
- November 2017 (100)
- October 2017 (105)
- September 2017 (97)
- August 2017 (101)
- July 2017 (104)
- June 2017 (155)
- May 2017 (135)
- April 2017 (113)
- March 2017 (138)
- February 2017 (150)
- January 2017 (127)
- December 2016 (90)
- November 2016 (135)
- October 2016 (149)
- September 2016 (135)
- August 2016 (48)
- July 2016 (52)
- June 2016 (54)
- May 2016 (52)
- April 2016 (24)
- October 2014 (8)
- April 2012 (2)
- December 2011 (2)
- November 2011 (10)
- October 2011 (9)
- September 2011 (9)
- August 2011 (3)
Calendar
Recent Posts
- Landlords’ Rights Bill: Let’s tell the government what we want
- 2025 will be crucial for leasehold reform as secondary legislation takes shape
- Reeves inflationary budget puts mockers on Bank Base Rate reduction
- How to Avoid SDLT Hikes In 2025
- Shelter Scotland slams council for stripping homeless households of ‘human rights’