A restrictive covenant affecting land is an agreement by one landowner to restrict the use of its land for the benefit of another’s land. Restrictive covenants may ‘run with the land’, binding future owners. They are often problematic for developers whose land is subject to restrictions as to what, if anything, can be built on the land.
If a developer decides to proceed with its plans, potentially breaching the restrictive covenant, the following should be considered:
Indemnity insurance to protect against enforcement of the covenant
Negotiating a release or variation of the covenant with the owners of the land benefiting from the restriction
Applying to the Upper Tribunal (Lands Chamber) to remove or modify the covenant
Applying to Court for a declaration as to whether land is affected by a restriction, the true nature and extent of the restriction and whether it is enforceable and by whom
This final option was recently pursued by Royal Mail, seeking a declaration that a restrictive covenant did not prohibit residential use at a site in Nine Elms, Vauxhall (Royal Mail Estates - v - Pridebank & Others  EWHC 1540 (Ch) 1540)).
The site had been used as a mail centre and benefited from a mixed use planning permission (including residential). However, it was subject to a covenant permitting only Post Office purposes, certain planning use classes or “housing and purposes ancillary to” those identified uses “including offices and housing”.
The issue was whether the first use of the word “housing” was a standalone exception, or if it was bound up with the rest of the covenant so that housing had to be ancillary to the other permitted uses.
The Court found that the wording clearly permitted housing as a standalone use. This is a useful example of the way the Court can interpret the drafting of restrictive covenants.
Restrictive covenants always require detailed consideration, particularly on the precise wording used. Whether an acceptable solution can be found depends on the facts and terms of the covenant and a full understanding of the risks involved, with the benefit of legal advice.
This article was written by Naomi Heathcote. For more information, please contact Naomi on +44 (0)20 7427 6432 or email@example.com.