Navigating restrictive covenants: Key considerations for developers

Restrictive covenants can pose significant challenges for developers and those working in strategic land, potentially limiting development opportunity and causing considerable delays and expenses.

We have set out five key factors and options to consider when dealing with restrictive covenants:  

Is the covenant actually enforceable?

The following requirements must be satisfied for a restrictive covenant to be enforceable:

• The covenant must be negative or restrictive in nature, and it must be clear which land benefits from and is burdened by the restrictive covenant.
  
  
• The benefit and burden of the covenant must have been intended to bind successors in title, rather than be personal to the original parties.
  
  It is not usually necessary to consider the transfer of the benefit for covenants imposed on or after 1 January 1926. There is a statutory presumption that these include successors in title and the benefit would be automatically annexed to the land if:
  • the covenant “touches and concerns” the land intended to be benefited;
  • the land is easily identifiable and capable of being benefited by the covenant at the time it is imposed; and
  • there is no express contrary intention.

• Restrictive covenants must be registered to be enforceable.  
  • For registered land there should be a notice on the title of the burdened land. This can be checked by obtaining the title register from HM Land Registry. The benefit of a covenant is typically not registered on the benefiting property title but could be identified through neighbouring title records or pre-contract inquiries.
  • For both registered and unregistered land, restrictive covenants created after 31 December 1925 usually must also be registered as a D(ii) land charge against the original covenantees to be binding and enforceable (even if an entry is noted on the charges register on first registration of the title). This can be checked by searching the Land Charges register.

Carefully examine the wording 

Many cases turn on the specific terms of the restrictive covenant and the covenant may also only affect part of the land being developed. On careful examination it could therefore be possible to plan the development around the specific restriction(s).

Apply to modify or extinguish the restrictive covenant

The Upper Tribunal (UT) has power to determine if a covenant is enforceable under Section 84(2)(b) of the Law of Property 1925. 

If the restrictive covenant looks to be enforceable and is breached by the development, it is possible to seek to modify or extinguish the restrictive covenant by applying to the Lands Chamber of the UT under Section 84(1) if one of the following grounds can be satisfied: 

• The covenant is obsolete.
• The covenant impedes some reasonable use of the land.
• Those with the benefit of the covenant have agreed to discharge or modify it.
• Discharge or modification would not injure the beneficiaries of the covenant.

The recent UT case of Ball & Anor v Fulton [2025] UKUT 135 (LC) is an example of a successful application to modify or discharge a restrictive covenant on grounds of obsolescence. The wording of the covenant was:

‘Not to erect on the land hereby conveyed any building other than a dwellinghouse which shall be a detached house of a general design and constructed of such types of materials and according to such plans and general specification as shall be submitted to and receive the reasonable approval of the Vendor such approval to be obtained before the building of any house on the land is commenced No windows except small windows fitted with opaque glass for a bathroom toilet or garage shall be constructed in any new building to be erected on the land hereby conveyed so as to overlook the Vendor's remaining property known as "Cox's" or the property to the north west side of the land hereby conveyed Any such small windows so permitted as aforesaid shall be so designed that the opening section of such windows are hinged at the top and open outwards for a few degrees only to the intent that they are so designed that they cannot be opened to give a view over the adjoining property of the Vendor on the south east side or the existing property on the north west side.’ 

A preliminary issue that the UT considered was whether this was obsolete as a result of the benefit of the covenant being personal to the Vendor. The UT decided that:

• The covenant was only intended to deal with the first building of a house on the transferred land. It did not make any provision as to extensions or alterations following the building of the house.
• The covenant did not make provisions for future consents in the event of the Vendor’s death which suggested it was intended to be for the immediate development and not to bind the land.
• The transfer referred to the Vendor’s successors in title in other sub-clauses and the transfer distinguished between other personal covenants and covenants benefitting successors.        

The UT agreed with the applicants that the covenant was personal and not binding on their land following the Vendor’s disposition of the retained land. 

The UT’s reasoning in Ball & Anor v Fulton highlights that a restrictive covenant must be considered on its own terms and facts. Similar wording will not always be found to have the same meaning. 

Obtain restrictive covenant title indemnity insurance

If it looks like a restrictive covenant is enforceable and would be breached by the development, it may be possible to obtain a restrictive covenant title indemnity insurance policy for the full development value. This would not prevent a beneficiary making a claim but seeks to cover any losses as a result. 

The Supreme Court has described a failure to inform beneficiaries of covenants that a development would interfere with before proceeding with an interference as a “cynical breach” in Alexander Devine Children's Cancer Trust v Housing Solutions Ltd [2020] UKSC 45 at para 36. Therefore, to try to minimise the risk of a court granting an injunction to restrain a development, beneficiaries should be notified and negotiations to modify or release the covenants be attempted. 

If discussions have not been held with an indemnity insurer before the beneficiaries are approached, it may not be possible to obtain indemnity insurance later down the line. Even if possible, the insurance may restrict the developer’s ability to negotiate.

Seek consent from the beneficiaries

A restrictive covenant may be qualified (where the restricted act can be carried out with consent). In this situation, if indemnity insurance is being sought then contact should be made with the insurer before contacting the beneficiaries for the reason mentioned above.

There is no guarantee that consent will be given by all necessary beneficiaries. If there are objections to a planning application for the development by beneficiaries, it is likely that they will use the restrictive covenants to oppose the development. Often the beneficiaries will refer to the restrictive covenants in their planning objection to try to persuade the planning authority that a development cannot be built out. While this is a private not public law consideration, planning committees may pay attention to this.

Beneficiaries often agree to release land from the burden of the restrictive covenant or consent to a specific development in consideration of a significant sum of money, which will need to be factored into the overall development cost.

Please do not hesitate to contact Andrew Ross, Helena Cullwick, or your usual Charles Russell Speechlys contact for any further information. This insight is not a substitute for legal advice on the specific circumstances of your situation.