“A developer secures planning permission for a site, only to discover—too late—that a restrictive covenant prevents the development altogether. This is a costly issue in practice.”
It is important for developers to be aware that, in English property law, restrictive covenants and planning law operate as two distinct yet overlapping systems. Restrictive covenants are private agreements between individuals who have voluntarily agreed to restrict land use, whereas planning law is a public regulatory framework that seeks to control land development in line with broader social objectives. One system does not override the other, and developers must be aware of and navigate these two systems.
What are restrictive covenants?
Restrictive covenants, as private arrangements, are usually created by deed. To be legally binding, they should have the following characteristics:
- They must be restrictive in substance (i.e. they oblige a landowner not to do something rather than to take action or spend money).
- The covenant must benefit identifiable land and the benefit must have passed to the person seeking to enforce it.
- The covenant must burden identifiable land.
- The covenant must be correctly protected, typically by registration (for registered land) or as a land charge (for unregistered land)
An example of a restrictive covenant:
The Transferee covenants with the Transferor for the benefit of the Transferor’s retained land not to carry out, or permit to be carried out, any residential development on the Property, with the intention that this covenant shall run with and bind the Property.
A restrictive covenant is intended to continue indefinitely and to bind successors in title.
Planning law
The key piece of legislation is the Town and Country Planning Act 1990, which forms the foundation of the planning system in England and Wales. Developers must typically apply for planning permission before they are able to lawfully carry out any development on their land, subject to certain exceptions such as permitted development rights. The decision to grant planning permission is governed by a regulatory framework and is driven by social and economic policy.
The conflict between planning law and restrictive covenants
Planning law does not extinguish restrictive covenants and restrictive covenants do not invalidate planning permissions. Therefore, whilst a developer may have secured planning permission, by undertaking the development, they may still face enforcement action from a party entitled to enforce the benefit of the restrictive covenant.
It is important for developers to understand the risk and to undertake title investigations before applying for planning permission and certainly before commencing development.
A solicitor can advise on the enforceability of the covenant and advise on any workable solutions. Solicitors can explore the availability of indemnity insurance (depending on the age and nature of the covenant and whether the beneficiary has already been approached), the possibility of agreeing a release of the covenant (the benefiting party may require payment), or whether an application to the Upper Tribunal (Lands Chamber) to discharge or modify the covenant is viable . The Tribunal has discretion in this regard if one or more of several grounds are met. The most common of these grounds being that the covenant “impedes the reasonable use of the land”.
There is a clear tension between private rights and public need and with housing being in short supply, I expect this issue to come under further scrutiny.
How Moore Barlow can help
We are widely recognised as one of the largest and most experienced land development solicitor teams in the South of England. Not only this, but we pride ourselves in building long-lasting relationships with our clients, so we can stand by and provide you with the necessary help and support you need through thick and thin. Whatever aims and goals you have, we can tailor our advice so that you succeed.
