Are restrictive covenants on a freehold property a glimmer of hope?

What is a restrictive covenant?

In Re 141a Dunstans Road, East Dulwich [2019] UKUT 171 (LC), the Upper Tribunal created an implied term into a restrictive covenant which restricted the owner of a freehold property from doing certain things in and to their property, to allow those things to be done with consent of the owner of neighbouring property (i.e. the beneficiary of the restrictive covenant), and that consent was not to be unreasonably withheld.

Restrictive covenants are commonly found in leasehold property, such as flats, but less so in freehold properties.

A house had been split into two (smaller) houses, and when one of those houses was sold, the transfer contained a restrictive covenant which had four elements:

• Not to use the premises other than as a private dwelling in the occupation of a single family
• Not to keep more than one domestic pet at any one time
• Not to play music (or an instrument) after 11:00 pm without permission of the owner of the adjoining property
• Not to alter the structure or external appearance of the property hereby transferred or to erect all walls fences hedges or garages without the consent of the owner of the adjoining property.

What are some problems with restrictive covenants?

The onerous nature of the covenant had caused two potential sales to fall through. One of the former prospective purchasers had more than one domestic pet, and therefore refused to proceed with the purchase.
It also prevented the owner from converting the house from a two bedroom to a three bedroom house, by converting the loft, and prevented the owner from converting the front garden to a drive way.

The owners of the house which was burdened by the restrictive covenant applied to the Tribunal to be released from the covenant, or to have it modified. The application was opposed by the owners of the neighbouring property.

After the hearing the Tribunal inspected the properties and found that neighbouring properties had converted their lofts, and that some properties had removed fences from their front gardens and dropped the curbs to allow for cars to be parked on their front gardens.

The Tribunal found that the covenants could not be discharged as they had not become obsolete. The covenants still give protection and remain of value to the owner of the neighbouring property.

The Tribunal did, however, find that it would readily imply from the language and context of the original transfer (after the house was converted into two houses), a term that consent should not be unreasonably withheld in respect of covenants numbered 3 and 4.

The Tribunal also modified covenant numbered 2, to include words to the effect that the owner of the property could have more than one domestic pet with the consent of the owner or occupier of the neighbouring property, such consent not to be unreasonably withheld.

The Tribunal found that no harm would be suffered or injured to the owners of the neighbouring property who benefited from the covenant.

What can home owners do to ease the restrictions of a covenant?

The Tribunal’s determination means that the use of freehold properties which are burdened by restrictive covenants may have those covenants converted into “fully qualified covenants”, i.e. a covenant which requires consent from the owner of the property who benefits from the restrictive covenant, such consent is not to be unreasonably withheld.

Whilst this decision does not completely remove the restriction attached to the use of the freehold property, it should give hope to owners of a freehold property which is burdened by a restrictive covenant that they may be able achieve greater flexibility and freedom to the use of their homes provided their proposed use is not deemed unreasonable.

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