What to do if you need to change a restrictive covenant on your home
Restrictive covenants are binding conditions that are written into a property’s deeds or contract by a seller to determine what a homeowner can or cannot do with their house or land under particular circumstances.
Newly built residential developments are frequently subject to a number of restrictive covenants, which limit what a homeowner is able to do with a property. For example a developer might have done this to protect and maintain the characteristic of the estate as a whole, which is beneficial to all the homeowners, preserving the value of each property.
Typical examples of restrictive covenants are not to adapt the property for business use, not to structurally alter or extend the property without the developer’s consent and not to carry out any development on the land.
Assessing the value and costs of changing a restrictive covenant can be complicated.
Zah Azeem, Partner at Scrivener Tibbatts, Chartered Surveyors in Wimbledon explains, “This is a specialised area of valuation, particularly in the residential sector.”
We were recently involved in a case involving the modification of a restrictive covenant in Liverpool which has confirmed, if such confirmation was needed, that valuations in these circumstances can be complicated.
In that case, the award to the owners of the burdened land was not a “Stokes v Cambridge percentage” or any share of development profit or anything like it. Our clients in Liverpool won the opinion of an independently appointed arbitration expert, who confirmed our opinions of value. This was substantially below the expectations of the owners of the benefited land in that case.
In an earlier case, in which we provided expert evidence, a widow, who wanted to maximise the use of her garden to provide a new family home for herself and her children, was prevented from doing so by a restrictive covenant. Our client was the owner of ‘burdened land’, who was asked to pay £250,000 in compensation in return for having the restrictive covenant modified. The Upper Tribunal decided to modify the restrictive covenant and they awarded compensation of £2,500 only.
In 2017 we were asked to advise Clients on no less than four occasions in respect of the ‘diminution in value’ to ‘benefited land’ on discharge or modification of restrictive covenants to be paid to owners of ‘burdened land’. Our clients owned variously benefited land and burdened land.
Some other specialist cases in which we were instructed can be found here:
UT neutral citation number: [2015] UKUT 0448 (LC) – Case number LP/10/2013
UT neutral citation number: [2017] UKUT 0203 (LC) – Case number LP/31/2015
UT neutral citation number: [2020] UKUT 0008 (LC) – Case number LP/13/2018
If you would like to discuss something related to a valuation please contact Zah via email at zah@scrivenertibbatts.co.uk or call 020 8947 7040.
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