How restrictive covenants can protect value and amenity

A recent decision to refuse an application to lift a restrictive covenant has shone a spotlight on this area of law. 

A restrictive covenant is a contractual obligation which controls what the landowner can or cannot do with their land.

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The legal case

In 2020, Craig and Jasbir Collins applied to the Lands Tribunal to have a covenant lifted from their land at Newpark Stables.

They wanted to construct an equestrian manège with associated landscaping, accessway and parking.

That land was once part of neighbouring Higher Norris Farm but was sold off by the previous farm owners with a covenant attached that restricted its use to sheep and horse grazing and arable and grass production.

The covenant expressly prevents the construction of buildings other than stables on the land.

When the Collinses secured planning permission, the current owners of Higher Norris Farm, Richard and Trudy Howell, objected.

They contended that the purpose of the covenant was to preserve the rural and entirely agricultural identity and character of the farm and its surroundings.

The issue was recently considered by the Upper Tribunal (Lands Chamber), which concluded the covenant should remain.

Gabrielle Roberts, senior associate at law firm Clarke Willmott, says the case demonstrates that developers can face an uphill struggle when it comes to developing land designated for agricultural use that is protected by a restrictive covenant.

She says that in finding against Mr and Mrs Collins, the tribunal had determined that the purpose of the covenant was to give Mr and Mrs Howell as the farm owners control over the activities that took place in the fields surrounding their home.

It also found that the manège would significantly alter the landscape in the immediate vicinity of Higher Norris Farm by creating a feature in plain sight that would be obviously man-made.

Ms Roberts says that although it is often asserted that there is “no right to a view”, this decision had illustrated that a well-drafted restrictive covenant may protect the setting and amenity of a property, preventing development.

“Each case is decided on its facts and an investigation of the particular circumstances is required to determine the likelihood of success of seeking modification of such restrictions,” she says.

In law, the land subject to a covenant is known as the servient land and the adjacent land as the dominant land.

Challenges to covenants

Clive Beer, who leads on restrictive covenant work at Savills, describes this area of land law as “fiendishly complex”, with some covenants dating back a century or more.

Although a covenant may exist in the title it may not be enforceable, so challenges are very common – they account for a large proportion of the Upper Tribunal’s caseload.

Mr Beer says the main reason to apply a restrictive covenant to land is to control its future use.

“The landowner may want to sell it, but not want it used as a solar farm or for pigs or poultry. It is possible to be very specific on this.”

The reasons for those restrictions might be because those uses could result in a loss of value or enjoyment of the retained land.

How covenants affect value

The presence of a covenant does not necessarily reduce the value of servient land.

For example, if 10 acres of land is being sold and that land is in the middle of nowhere, its only likely use is for agricultural purposes, so placing a covenant on that sale will not affect its value, says Mr Beer.

“By placing a covenant on it you are future-proofing its use, making sure all it is ever going to be used for is agriculture, but excluding certain aspects of agriculture you don’t want to see on it. 

“This doesn’t necessarily decrease the value of the land, especially given the historic low volume of land coming onto the market.”

In contrast, if those 10 acres are in a village, that land might have hope value, but if a restrictive covenant was in place that would inhibit the potential development value.

If landowners want to sell that land and also specifically want to reserve future increases in value, Mr Beer advises an overage provision as opposed to a restrictive covenant.

This provision will appear as a contractual term in the land transfer document and will state that if the buyer achieves development consent within a specified number of years and the land increases in value, the original seller will automatically receive an agreed percentage of the increase in value.

Mr Beer says there is significant value in seeking specialist advice when land with a covenant attached is being purchased.

“I would strongly advise talking to someone who understands this area of law, as every case will be different,” says Mr Beer.

“What you don’t want is a situation where you apply for a covenant to be modified or lifted without taking appropriate advice, and find that the owner of the dominant land is willing to fight it and you face a huge legal bill, without the resolution you had hoped for.”