Freehold Restrictive Covenants

Restrictive Covenants relating to freehold land

a "restrictive covenant" is any agreement in which one of the parties agrees not to do something, but usually when the phrase is used it refers either to (a) a covenant preventing an employee, leaving one company and joining a competitor, from using information acquired in the former company's employment to the former employer's detriment, or (b) a covenant restricting what can be done with land. With regard to land there is a fundamental distinction between restrictive covenants in a lease affecting leasehold property, which are commonplace, and restrictive covenants burdening freehold land which are less common and raise particular questions.

This article is solely about restrictive covenants affecting freehold land in England and Wales.

When landowner A sells part of their land to someone else B, the deed ("conveyance" or "transfer") giving B ownership of the land may contain a covenant that B will not do certain things on that land. For example A may wish to protect their privacy by means of a covenant that B will not erect buildings over a certain size within a certain distance of the boundary, or there may be restrictions on windows on a certain face over a certain height. As well as protecting privacy, A may wish to maintain what they see as the character of the area, for example by means of a covenant restricting the land of B to residential use or even, more specifically, to a "single dwellinghouse".

There are some other ways in which restrictive covenants can be imposed. For example when the Leasehold Reform Act 1967 was passed allowing house tenants with long leases to acquire the freehold, some schemes were established under s19 of the Act, where a single landlord had owned the freehold of all houses in an area, to continue the restrictions on development with a view to maintaining the character of an area.

Restrictive covenants are separate from planning permission. The fact that someone has planning permission for a development does not remove the obligation for them to abide by any covenants burdening their land.

Who can enforce Restrictive Covenants?

If a neighbour threatens to breach a restrictive covenant binding on their land then the landowner whose land has the benefit of the covenant will generally want to obtain an injunction to prevent breach rather than simply claim monetary compensation. An injunction is a discretionary remedy which a court is more likely to grant if it is applied for promptly before too much building work, for example, has been carried out. However before taking legal action it will be important for the the objecting neighbour to establish quickly whether or not they have the right to enforce the covenant as a failed legal action can be costly. A landowner who seeks an immediate injunction will have to give an "undertaking in damages" - i.e. the court, when granting an interim injunction, will require the landowner applying for the injunction to undertake to the court that in the event that at the final hearing - which might be in say a years time - it is decided that they are not entitled to enforce the covenant after all, they will compensate the other landowner who has been prevented, for a year, from carrying out building work which, it turns out, they were always entitled to carry out. 

So it is important to establish quickly whether or not the particular landowner who wishes to prevent a development is entitled to the benefit of the restriction as the only person entitled to enforce a restrictive covenant is the owner of land which was, or was part of, the land intended to be benefited by the covenant when it was imposed. If a copy of the conveyance or transfer imposing the covenant is available it may indicate, by means of a plan, exactly what land is intended to be benefited by the covenant, but many conveyances simply say that the covenant is intended to benefit "the vendor's retained land" in which case it may be necessary to obtain historical conveyances and use them to ascertain what other land the vendor had at the time of the conveyance imposing the covenant. 

Historically it was common for each plot of a housing development to be sold by the developer subject to similarly worded restrictive covenants, but this, by itself, does not mean that every current plot owner will be able to enforce the covenants against every other plot owner. Generally an owner of plot A will not be able to enforce restrictive covenants against the owner of plot B unless plot B was originally sold off before plot A. This is because if plot B had been originally sold off after plot A, plot A would not have been part of the vendors retained land intended to benefit from the covenant imposed on plot B when it was originally sold off by the developer. But sometimes it is possible to show, either by the existence of a specific deed, or some other indication in conveyances, that there was a common intention by the vendors and each and every original purchaser of plots within a known and defined area that all restrictive covenants imposed within that area should be mutually enforceable by and against every owner. In this case - which is unusual - the sequence of sales does not matter. This is known as a  "scheme of development".      

There are legal rules which mean that particular covenants may cease to bind. For example if the burdened land changes hands when the covenant has not been registered it will, in general, not be enforceable against the new owner who was not aware of it. Also if the benefited and burdened land have come back into common ownership, at some time after the time of the conveyance imposing the restrictive covenant, the covenant will cease to have effect unless reimposed when the land is subsequently split (but this will not be the case if there is a "scheme of development" as the entitlement of the other plot owners means that the obligation is not lost when two plots come into common ownership). 

Applications under s.84(1) of the Law of Property Act 1925 to discharge or modify restrictive covenants

The owner of land which is subject to the burden of a restrictive covenant can apply to the Lands Chamber of the Upper Tribunal (previously known as the Lands Tribunal) to have it discharged or modified. There are a number of grounds on which an application can be made but, put simply, if a covenant does not provide any practical advantage or value for the neighbouring landowner(s) entitled to enforce it, or if it does provide some relatively modest practical advantage which could be compensated for in money, then the Tribunal may discharge or modify it. But if it can be shown to have more substantial value to the neighbouring landowner entitled to enforce then it probably will not be discharged or modified by the Tribunal.

That is a simplified summary of the most common ground on which applications are made but there are in fact four possible grounds on which an application can be made, as the full wording of Section 84(1) of the Law of Property Act 1925 shows:

84.— Power to discharge or modify restrictive covenants affecting land.

(1) The Upper Tribunal shall (without prejudice to any concurrent jurisdiction of the court) have power from time to time, on the application of any person interested in any freehold land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by order wholly or partially to discharge or modify any such restriction on being satisfied— 

(a) that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Upper Tribunal may deem material, the restriction ought to be deemed obsolete; or 

(aa)   that in a case falling within subsection (1A) below the continued existence thereof would impede some reasonable user of the land for public or private purposes or, as the case may be, would unless modified so impede such user; or 

(b)    that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the restriction, whether in respect of estates in fee simple or any lesser estates or interests in the property to which the benefit of the restriction is annexed, have agreed, either expressly or by implication, by their acts or omissions, to the same being discharged or modified; or 

(c) that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction: 

and an order discharging or modifying a restriction under this subsection may direct the applicant to pay to any person entitled to the benefit of the restriction such sum by way of consideration as the Tribunal may think it just to award under one, but not both, of the following heads, that is to say, either— 

(i)  a sum to make up for any loss or disadvantage suffered by that person in consequence of the discharge or modification; or 

(ii)   a sum to make up for any effect which the restriction had, at the time when it was imposed, in reducing the consideration then received for the land affected by it.

(1A) Subsection (1) (aa) above authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of land in any case in which the Upper Tribunal is satisfied that the restriction, in impeding that user, either— 

(a) does not secure to persons entitled to the benefit of it any practical benefits of substantial value or advantage to them; 

or

 (b) is contrary to the public interest;

and that money will be an adequate compensation for the loss or disadvantage (if any) which any such person will suffer from the discharge or modification.

(1B) In determining whether a case is one falling within subsection (1A) above, and in determining whether (in any such case or otherwise) a restriction ought to be discharged or modified, the Upper Tribunal shall take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas, as well as the period at which and context in which the restriction was created or imposed and any other material circumstances.

Of the four grounds (a), (aa), (b) and (c) the ones most commonly relied on are (aa) and (c), though typically (b) will be included in any application as well in case applicant and objector are able to reach agreement while the application is in progress.

Although ground (aa) is more complex than ground (c) it is typically ground (aa) which is the more likely to succeed in the average case. This is because under ground (aa) the tribunal can discharge (or modify) a covenant even though there will be some adverse effect on the property entitled to the benefit of the covenant if it is possible to make up for any loss or disadvantage there is by awarding monetary compensation.         

A key phrase in the legislation is "persons entitled to the benefit..." A proposed development may affect one neighbour more than another but, although the Tribunal has a residual discretion, under grounds (aa) and (c) the Tribunal's focus, when considering whether to modify or discharge a restrictive covenant, is on the impact on the neighbour whose land was originally intended to benefit from the covenant rather than the wider impact on other neighbours who are not entitled to the benefit of the covenant.     

Disclaimer

The above explanation of the law is only an overview and in order to be reasonably concise I have had to leave some details out - details which are likely to affect what the law would say about your own situation. So please do not rely on the above but contact me for advice 

This page was lasted updated in March 2025         Disclaimer