Restrictive covenants can significantly impede land development, even if planning permission is granted. Developers encountering such restrictions can seek modification or discharge via section 84 of the Law of Property Act 1925, provided certain legal tests are met.
Restrictive covenants need not be deal-breakers for development. With a clear understanding of your legal options and a strategic approach, you can often resolve or work around these restrictions.
Beeches Capital v Hunt: The Facts Beeches Capital owned land with planning permission for a rural office hub. However, a covenant from 1959 prohibited non-agricultural buildings, benefiting adjacent land owned by Mrs Hunt. Beeches Capital sought either the discharge or modification under section 84 on the basis that the covenant was obsolete. The personal representatives of the late Mrs Hunt objected.
Tribunal’s Decision The Upper Tribunal (Lands Chamber) found that the covenant was not obsolete. Though still offering some benefit to the neighbour, this benefit was minor and could be compensated financially. The Tribunal allowed modification limited strictly to the approved development plan, including landscaping conditions. The Tribunal rejected Beeches Capital’s request for the covenant to be discharged.
Compensation to Covenant Holders The Tribunal awarded the objector £15,000 in compensation for temporary loss of amenity due to visual and activity impacts, mitigated by planned landscaping. Compensation ensures beneficiaries aren’t disadvantaged by modification or discharge.
Key considerations for developers:
- Early identification: Check property titles early for restrictive covenants.
- Planning permission: Securing planning consent strengthens your case by demonstrating reasonable use.
- Impact assessment: Provide evidence of minimal or mitigated impact on neighbours.
- Negotiation and modification: Attempt to negotiate before pursuing a tribunal decision. Offer specific conditions or modifications rather than complete discharge.
- Budget: Allow time and financial resources for legal processes and potential compensation payments.
The Beeches Capital case demonstrates a practical route to overcoming restrictive covenants. With strategic planning, developers can unlock development opportunities while respecting neighbours’ rights.
Visit our services pages for more information on the Restrictive Covenant support provided by our team. To speak to a Property Litigation specialist, contact James Holton by emailing james.holton@dtmlegal.com or telephone 01244 354 800.
