Restrictive covenants on residential property: why they matter before you buy

When you buy a house, flat or piece of land, it is natural to think that ownership means freedom of use. In most cases, you can decorate, furnish and enjoy the property as you choose. However, some properties come with legal restrictions which can limit what you are allowed to do with them. These restrictions are known as restrictive covenants. They are not always a problem but they should always be understood before you commit yourself to a purchase.

What is a restrictive covenant?

A restrictive covenant is a promise not to do something with land or property. It is usually set out in the title deeds or Land Registry Title Document if the property is registered. Unlike a personal promise between two people, a properly drafted restrictive covenant can “run with the land”, which means it may continue to bind past or future owners long after the original sale has taken place.

That is why a covenant created by a developer many years ago may still be relevant when you buy the property today.

Why are they used?

Restrictive covenants are often put in place for sensible reasons. A developer selling plots on a new estate may want to preserve the appearance of the development. A landowner selling part of a garden may want to prevent building on the land sold. The owner of neighbouring land may want to make sure that a house is used as a private home rather than for a business that could cause noise, extra traffic or disturbance.

In other words, covenants are usually designed to protect the character, amenity or value of land. For a buyer, the important question is not simply whether a covenant exists, but whether it affects your plans.

How could this affect your decision to buy?

A restrictive covenant may make no practical difference at all. If you are buying a houseto live in as it stands and the covenant simply prevents commercial use for example,you may be comfortable proceeding.

However, the position can be very different if you want to extend the property, build in the garden, keep a caravan on the drive, install external equipment, run a business from home, convert a house into flats, or use the property for holiday letting. Even if planning permission or building regulations approval might be available, that does not automatically mean a restrictive covenant can be ignored. Planning consent and covenant consent are separate issues.

Before exchange of contracts, your conveyancer should review the title and report to you on any covenants. This is the right time to ask practical questions. Does the covenant prevent something you definitely intend to do? Is consent needed from a developer, neighbour or management company? Is that person or organisation still traceable? Has there already been a breach of the restrictive covenant?

Some common examples

Restrictive covenants vary from property to property, but buyers commonly come across restrictions such as:

• not to build an extension, garage, shed or other structure without consent
• not to use the property for business purposes
• not to convert a house into separate flats or multiple dwellings
• not to park a caravan, motorhome, boat or commercial vehicle on the property
• not to keep poultry, livestock or certain animals
• not to alter the external appearance of the property, including windows, fences, walls or the front garden
• not to display signs, satellite dishes, aerials or similar equipment in a prominent position
• not to cause nuisance or annoyance to neighbouring owners
• not to build above a certain height or on a particular part of the land
• not to use the property for short-term holiday lets or serviced accommodation.

Some of these restrictions may seem old-fashioned. Others can be surprisingly modern. Either way, they should not be dismissed just because they appear in old documents.

Will it affect value?

A covenant can affect value in two main ways. First, it may reduce what you can do with the property. A large garden may be less valuable to a buyer who wants to build a separate dwelling if there is a covenant preventing further development. A property that cannot be used for holiday accommodation may be less attractive to an investor. A flat with strict rules about alterations may not suit someone hoping to reconfigure the layout.

Secondly, a covenant can create uncertainty. If a buyer’s solicitor spots a possible breach, it may delay the sale while enquiries are raised. The buyer may ask for indemnity insurance, retrospective consent, a price reduction, or evidence that the covenant is no longer enforceable. In some cases, a nervous buyer may decide not to proceed.

What if there has already been a breach?

It is not unusual for a homeowner to discover that a previous owner has built a conservatory, put up fencing, installed a satellite dish, or changed the use of part of the property without obtaining the consent required by a covenant. The options will depend on the wording of the covenant, who has the benefit of it, whether anyone is likely to enforce it, how long ago the breach occurred and what the buyer and lender require. Sometimes the solution is to obtain consent. Sometimes indemnity insurance may be appropriate. Sometimes further legal advice is needed before any approach is made, because contacting the person with the benefit of the covenant can aAect the availability of insurance.

Buying with your eyes open

Restrictive covenants should not necessarily put you off buying a property. Many are routine and manageable. The key is to identify them early, understand what they mean in real life, and decide whether they fit with your plans.

If you are buying, tell your conveyancer what you hope to do with the property, not just that you want to buy it. If you are selling, check whether any alterations or uses may have breached a covenant before the issue is raised by the buyer’s solicitor.

A restrictive covenant is often just one part of the title. However, in some situations, it can make a significant difference to what a property is worth, how easily it can be sold and whether it is the right property for you.

How Fraser Dawbarns can help

The expert residential property team at Fraser Dawbarns regularly deals with matters where there are restrictive covenants on the property being bought or sold and as such, will be able to advise you on their effect early on in the transaction. Please contact the conveyancing team in any of our offices, in King’s Lynn, Wisbech, Downham Market, March or Ely for individual advice, or complete the contact form below and we’ll be in touch.

How To Contact Us:

To contact a member of our team, you can fill in our online enquiry form, email info@fraserdawbarns.com, or call your nearest office below. If you’d like to speak to a member of our team at one of our offices across Norfolk and Cambridgeshire, visit our offices page.

Wisbech: 01945 461456

March: 01354 602880

King’s Lynn: 01553 666600

Ely: 01353 383483

Downham Market: 01366 383171

This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.