When you buy a house or a flat, you may be under the impression that, now that your name is on the title deeds, you can do as you please with it. However, buyers beware! This isn’t always the case. Enter: restrictive covenants.
In this guide, we’ll give you the rundown on what these are, how they work and how to handle them.
What is a restrictive covenant?
In property law, a restrictive covenant is a promise between two landowners, where one party commits to the other that they won’t do certain things on the land.
Typically, restrictive covenants come into play when someone is selling land and wants to limit what the buyer can do with it. However, it can also work the other way around, where the person selling agrees to restrict their own use of the land they retain.
The obligation to follow a restrictive covenant doesn’t go away, even if the land changes hands or how much time passes, but there are steps that can be taken to remove it.
Examples of restrictive covenants
Here are a few examples of restrictive covenants to help you understand how they might work:
Residential Use Only
A landowner might impose a restrictive covenant that the land can only be used for residential purposes, this means the buyer can’t later turn it into a commercial property.
Architectural Restrictions
A restrictive covenant could specify certain architectural guidelines, like maintaining a specific style of buildings or making sure structures don’t exceed a certain height in order to maintain a consistent aesthetic in the neighbourhood.
No Subdivision
A landowner might restrict the buyer from subdividing the land into smaller plots to maintain the overall character of an area.
Preservation of Green Spaces
There might be a covenant to preserve certain areas as green spaces or parks, preventing any development on those specific parts of the land.
Commercial Restrictions
In residential areas, there might be a restrictive covenant that prevents the establishment of commercial enterprises on the property to make sure it remains a quite, resident friendly space.
What’s the point of a restrictive covenant?
Essentially, restrictive covenants are a clever way of stopping property owners from making changes to their property or land which could impact the surrounding neighbourhood, both aesthetically (i.e. how it looks) or otherwise.
Sometimes, restrictive covenants can also be put in place so landowners can protect the value of the property or land. Or even just to give them some control over what happens to it.
Restrictive covenants can and do cover a wide range of actions from the kind of fixtures and fittings you can attach to a building to the proper maintenance of gardens.
How enforceable are restrictive covenants?
This is a big question. On big housing estates, the company selling the houses usually wants to get rid of all its land, including spots for houses, roads, and green spaces. In these cases, they might not bother holding onto the power to enforce restrictive covenants, and so it gets a bit fuzzy whether they can really make you follow them.
If a homeowner does break a restrictive covenant, like building an extension without permission, usually nothing much happens…until you want to sell the house. Then you might need to get a special insurance policy to cover any potential issues, although this is usually a requirement of a lender than someone enforcing the convenant.
The real issue with enforcement of restrictive covenants comes in smaller communities where everyone knows about these rules. In these cases someone may have the right to enforce them, which is when issues can arise.
Other issues to take into account that may make a restrictive covenant unenforceable include:
Restrictive covenants not being properly registered with the Land Charges Department;
The original landowner can’t be trace;
The wording is ambiguous;
The covenant is historically obsolete.
To what kind of properties to restrictive covenants apply?
We’ve mentioned that restrictive covenants are often used to maintain the aesthetics of a neighbourhood, particularly in housing developments. So you might be forgiven for thinking that restrictive covenants are only a quirk of new build homes.
But this isn’t the case.
Restrictive covenants can be placed on all kinds of properties, new and old. But they are most commonly used for residential properties.
Do restrictive covenants affect a property's value?
Yes, restrictive covenants can affect a property’s value depending on the nature of the restrictions.
In some cases, where a restrictive covenant aims to preserve the character of a neighbourhood, it might enhance the property’s market appeal and value. However, overly restrictive covenants could have the opposite effect as potential buyers might be put off by them, resulting in a lower sale price.