Developer defeats obsolete "one house only" restrictive covenant

A recent decision of the Upper Tribunal (Lands Chamber) has discharged a restrictive covenant over a development site in Ealing which prevented the erection on the land of anything other than one dwelling house. The proposal was to build 8 flats following the demolition of the existing house on the site.

The covenant had been imposed in 1955 when the land in question had been sold having been part of a garden of a large Victorian residence.  The remaining Victorian residence and grounds were subsequently comprehensively re-developed to construct 11 flats and 22 maisonettes in four three storey blocks with associated garages and grounds.

The objectors to the proposal to demolish the dwelling and construct 8 flats were, ironically, the owners of the flats and maisonettes that had been built in the 1960s on the site of the old Victorian house including the management company which owned the freehold.

Perhaps unsurprisingly the Upper Tribunal had no sympathy for the objectors.  The covenant had been imposed in the 1950s to protect a large detached Victorian dwelling house and its grounds from inappropriate neighbouring development. The Tribunal felt there was no continuing relevance given that the property which benefitted from the restriction had itself been demolished and completely replaced by blocks of flats and maisonettes. 

Whilst the loss of the original building is not in itself a reason for the covenant to be discharged, the nature of the replacement buildings was. The Upper Tribunal found it impossible to accept the idea that the erection of the 8 new flats nearby was any less attractive than the existence of other existing flats and maisonettes within the objectors’ own estate. They therefore ordered the discharge of the ‘one dwelling house only’ covenant enabling the developer to proceed with its project to construct 8 flats.

This case is a clear illustration of when an old covenant can become obsolete as a result of the changes to circumstances and physical alterations to the land benefiting from it (the dominant land).  However even in this situation there was at least an arguable case that the covenant was not obsolete and therefore it will remain necessary for the developers investigating their proposed sites to adopt a very cautious approach to assessing the impact of restrictive covenants.

In many cases indemnity insurance can be taken out against the risk of enforcement but in others the covenant has to be removed or modified one way or another.

If a negotiated release with the owners of the dominant land is not possible, an application to the Upper Tribunal using the procedures available under Section 84 of the Law of Property Act 1925 is the last resort. 

Careful analysis of the strength or weakness of a restrictive covenant can therefore serve two purposes, first to see if the covenant in question actually applies and is enforceable and secondly to help developers minimise insurance premiums for restrictive title indemnity insurance policies by providing a careful risk assessment based on factors such as the age of the covenant, the relative locations of the dominant land and the burdened land, whether other breaches of the covenant have occurred nearby and the impact of changes to the neighbourhood generally. 

For further information please speak to Derek Ching ([email protected]) and Russell May ([email protected])