Should I Buy a House with a Restrictive Covenant

Should I Buy a House with a Restrictive Covenant?

When browsing homes for sale or reviewing the title deeds of a property you are interested in, you may come across the term “restrictive covenant”. For many buyers, it is an unfamiliar concept that raises questions and concerns. What exactly does it mean? Will it stop you from making changes to your home? And is it a deal breaker?

Restrictive covenants are legally binding conditions written into the deeds of a property, usually by a previous owner or developer. While they are common in UK property law and often harmless, some can limit what you can do with your home. Before you commit to a purchase, it is essential to understand the nature of any restrictive covenants in place, how they could affect your plans and what options you have to deal with them.

This article explains what restrictive covenants are, how they work, when they matter and what steps you should take before buying a home with one.

What Is a Restrictive Covenant?

A restrictive covenant is a clause that prevents the owner of a property from doing certain things with it. These conditions are legally enforceable and pass from one owner to the next, meaning they remain in place even when the property changes hands. They are most commonly found on freehold properties and are usually included to preserve the character or intended use of an area.

Typical examples include restrictions on building extensions, running a business from the property, keeping certain animals or altering the appearance of the house. Some covenants go further, forbidding fences at the front of the property, banning satellite dishes or requiring consent before making structural changes.

Restrictive covenants are different from planning rules. Even if you obtain planning permission from your local authority, you could still be in breach of a restrictive covenant if you carry out a prohibited act. This makes it vital to understand all legal restrictions on a property before going ahead with your purchase.

Why Are They Put in Place?

Restrictive covenants are often introduced by developers when they first build or sell a group of homes. They are designed to maintain a uniform appearance, prevent activities that might disturb other residents and protect the value of nearby properties. For example, a covenant might ban commercial use of a residential home or restrict certain types of building work to preserve sightlines and access.

In older properties, covenants may reflect outdated values or historic circumstances. Some were originally introduced by landowners who wanted to control the future use of a parcel of land after selling it. Although some of these older restrictions may seem irrelevant today, they can still be enforceable unless removed or deemed obsolete by a court.

How Can a Restrictive Covenant Affect You?

Before buying a house with a restrictive covenant, you need to consider how it might affect your plans for the property. If you are simply looking for a home to live in and have no intention of carrying out alterations or using it for anything other than standard residential purposes, many covenants will not cause any problems.

However, if you plan to extend the property, convert the garage, run a business from home or make changes to the external appearance, you must check whether any restrictive covenants could prevent this. Breaching a covenant can lead to legal action from those entitled to enforce it, often resulting in fines, demands for restoration or an injunction to stop further work.

In some cases, a restrictive covenant can deter buyers at resale stage, especially if it prevents commonly desired improvements such as loft conversions or rear extensions. Even if you are not personally affected, the restriction could reduce the marketability of the property in future.

Are All Restrictive Covenants Enforceable?

Not all restrictive covenants are actively enforced. In many cases, especially with older covenants, it may not be clear who benefits from the restriction or whether they still have the legal right to take action. However, unless a covenant has been formally removed or ruled unenforceable by a court, you should assume it is still valid.

Your solicitor will review the title documents and advise you on the presence and likely enforceability of any covenants. If there is uncertainty, they may recommend indemnity insurance, which protects you against the risk of enforcement. This insurance is usually inexpensive and provides peace of mind, but it is only effective if you do not draw attention to the breach or seek consent for the prohibited activity.

If the covenant poses a serious obstacle to your plans and indemnity insurance is not suitable, it is possible to apply to the Lands Chamber to have the covenant modified or discharged. This process can be time consuming and uncertain, so should only be considered if the restriction significantly limits your use of the property.

Should a Restrictive Covenant Put You Off Buying?

In most cases, a restrictive covenant should not automatically put you off buying a property. Many homes in the UK are subject to covenants, and the vast majority do not interfere with day to day living. What matters most is whether the specific covenant affects your intended use of the home.

If you plan to leave the property as it is and simply enjoy living there, a covenant that restricts commercial use or prevents front garden fencing may be of little consequence. However, if you are planning major works or want maximum flexibility in how you use the space, you need to examine the restrictions carefully.

A good solicitor will help you understand the implications and assess the risk. If the covenant is clear, commonly found and unlikely to be enforced, you may decide it is a risk worth taking. If it is unusual, actively enforced or vague in scope, you might decide to walk away and find a property without such limitations.

What Should You Do Before Proceeding?

The key to making a confident decision is to seek clear legal advice. Your solicitor should identify any restrictive covenants and explain their origin, purpose and enforceability. Ask them whether the restriction is likely to impact your plans and whether indemnity insurance is an appropriate safeguard.

If you are particularly concerned about a restriction, consider speaking to a property litigation specialist who can offer further advice on the legal options for dealing with it. In some cases, it may also be possible to negotiate with the party who benefits from the covenant to obtain consent or formal release.

Most importantly, do not ignore restrictive covenants or assume they are outdated and irrelevant. Taking the time to investigate them properly can save you significant problems down the line and ensure that your new home is not only legally secure but fully suited to your lifestyle.