22 November 2016

How do restrictive covenants work?

Buying a house is ultimately a rewarding process, but it’s not always straightforward. Whether mulling over a mortgage, survey or home insurance deal, you’ll have plenty to consider once your offer has been accepted.

As you move through the property-buying process, it’s also worth reading up on one of the quirkier areas of property law: restrictive covenants. If you’re a first-time buyer, or even an existing homeowner, this might just sound like a piece of legal jargon. But restrictive covenants shouldn’t be dismissed as mere small print. That’s because they can determine what you’re allowed to do with a property after you’ve bought it.

What is a restrictive covenant?

In simple terms, they’re conditions which have been written into a property’s deeds or contract by a seller. Essentially, they prevent the buyer from making certain changes to a house – or from using it for a certain purpose. They differ from other restrictions which may be put in place via a leasehold agreement or by local councils, in that they are legally enforceable. If a buyer fails to comply with a restrictive covenant, they could face legal action.

But these covenants shouldn’t necessarily be viewed as a bad thing. They’re often designed to maintain the image of a housing estate or development, preventing changes that could damage its reputation. As a result, they might prove beneficial if you want your area to hold onto its kerb appeal in the long term.

Here, we take a look at what restrictive covenants actually involve, as well as the potential implications for home-buyers.

What can restrictive covenants apply to?

Restrictive covenants can apply to new developments. For instance, a housing developer or property management firm might draw up a list of restrictions when selling a home on a new estate, in an effort to maintain high standards. Such restrictions might stop you from dramatically changing the external appearance of your property or leaving your garden untidy.

Other recent examples of restrictive covenants on new homes include:

  • Buyers being told they couldn’t hang out washing where it could be seen by other people

  • Developments where residents aren’t allowed to park caravans on their driveways

  • An estate where a man was told to remove CCTV cameras from his home. 

But restrictive covenants don’t just affect new developments, as they can be found in the deeds of older properties too – often with strange results. The contracts of some older homes may prevent people from adding extensions or new outbuildings. While that may sound reasonable enough, others might specifically stop homeowners from keeping chickens, pigeons or even pigs in their back gardens.

What should buyers consider?

Whether you’re buying a new-build property or a home which has been around for decades, it’s important to consider the potential impact of restrictive covenants. After having an offer accepted on a house or flat, ask your solicitor to flag up any restrictions which appear in the property’s deeds.

Understandably, the discovery of unusual restrictions might dampen your enthusiasm to buy a particular home. But the appearance of restrictive covenants in the deeds needn’t always be a cause for panic. After all, those designed to keep the look of an estate to an agreed high standard might actually prove beneficial – ensuring your local area doesn’t become run down as time goes on.

If you’re purchasing a home within a new development, the management company might be willing to make an exception and change any particularly concerning aspects of your contract. Buying indemnity insurance could also protect you against potential covenant breaches.

For older properties, you might simply decide that the restrictive covenants contained in the deeds are no longer relevant – or very unlikely to be enforced – because the house has changed hands so many times over the years. As they get older, covenants can lose their power as the question of who can actually enforce them becomes less clear.

If all else fails, you could apply to the Lands Chamber of the Upper Tribunal if you feel restrictive covenants are no longer valid. This body has the power to amend or remove them.

What other restrictions might buyers face?

It’s worth noting that restrictive covenants aren’t the only restrictions which can apply to properties. As mentioned at the beginning of this article, restrictions can be put in place via leaseholds or by local councils, so it’s important to speak to your solicitor and make sure you are fully aware of any issues before going through with a purchase.  

Finally please don't forget that your mortgage lender will need to be satisfied that any restrictive covenant will not adversely affect a mortgage they offer you. Your solicitor will let you know if this is the case and will advise you accordingly.  

To learn more about the ins and outs of the home-buying process, check out our property guides

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