Modification or Discharge of Restrictive Covenants
These can involve a specialised area of valuation.
We are pleased to report a decision made by the Upper Tribunal (Lands Chamber), which may be found at [2015] UKUT 0448 (LC).
Michael Tibbatts MRICS is a registered expert witness and his profile might be found at:
http://www.xsurv.co.uk/michaeltibbatts
This was an application made under Section 84(1) of the Law of Property Act 1925 to discharge or modify an historical restrictive covenant and so release development potential in a plot of land at Thorpe Bay in Essex SS1 3JN. Those entitled to the benefit of a restriction on further development on this plot (rear garden of a house) sought compensation in excess of £500,000 at one stage, later reduced to a claim for £225,000.
The Applicant, the owner of the plot, had to prove – Section 84(1)(a)…. That by reason of changes of character of the property or the neighbourhood or other circumstances of the case which the Tribunal may deem material the restriction ought to be deemed obsolete:
And/or:
Section 84(1)(aa)…. That in a case falling within Subsection (1)(a) the continued existence of the restriction would impede some reasonable user of the land for public or private purposes … or, as the case may be, would unless modified so impede such a user:
And/or:
Section 84(1)(c)… That the proposed discharge or modification would not injure the persons entitled to the benefit of the restriction.
Following a two day hearing, the Upper Tribunal (Lands Chamber) found in favour of the Applicant and ordered minimal compensation to one objector in the sum of £2,500. The objector who claimed £225,000, a property company, was awarded no compensation.
The valuation issues surrounding this case concerned the diminution in the price paid for the subject property when the restriction was imposed, and the negative impact on the value or the objectors’ properties if the development proceeded consequent upon the restriction being modified or discharged.
The Upper Tribunal heard expert submissions from Counsel – Mr Edward Denehan of 9 Stone Buildings – and expert valuation evidence presented by Michael Tibbatts MRICS, both for the Applicant.
The Upper Tribunal decided that the property company, one of the objectors with the benefit of the restrictive covenant, would not be injured in any way should the restriction be modified, that the restriction did impede a reasonable user by the Applicant, and it could not be shown that the price paid for the subject property when the restriction was imposed was less than it otherwise would have been. Accordingly, the property company was not entitled to claim any compensation.
This case highlights instances of opportunistic property owners, who have the benefit of ancient restrictive covenants, and who try to make profit when, in many cases, they are not entitled to any claim.
