Should I buy a house with a restrictive covenant? The experts give their view

Restrictive covenants are important legal restrictions that regulate either the appearance or use of the property.

This may sound arcane, but these restrictions on how you may use your property, or how it relates to its neighbours, are fairly common, according to Liz Williams, a land and property acquisition specialist.

“The most important thing is to read and understand them,” she says. “When you are buying a property, your solicitor should provide you with a document called a "report on title” before you decide to exchange, and then complete on the land or property. In that report, which you should always read, the solicitor should detail what restrictive covenants exist, and what the risks to you are.”

Alternatively, before this stage you can carry out your own “title” check by looking at the registered title at the Land Registry. Liz recommends this as a very inexpensive way (from £7) of looking at any restrictions on the property before you commit to legal costs. She warns that you should always use the government site to do this; other landing pages may involve extra costs.

Liz Williams

Liz Williams has spent more than 30 years working in housing, land, housebuilding, construction and property. Liz currently sits on the Housing and Communities Board of the Centre for New Midlands Think Tank and offers private consultancy to land and property owners, purchasers, landlords and developers.

What does having a restrictive covenant mean?

The vast majority of properties don’t have any restrictive covenants. But for those that do, restrictive covenants are important legal restrictions.

“They typically form part of the property deeds and must be taken seriously as they can be enforced by law,” warns presenter, author, businessman and property investor Phil Spencer.

“In short, if you’re considering buying a home with a restrictive covenant you need to know what it is and what it restricts.” If you have plans to extend, for example, and the restriction prevents this, you will find yourself having a battle to do as you wish.

The presence and nature of any restrictive covenant should be picked up by your conveyancing solicitor – so do make sure you read through any correspondence they send you carefully and query anything you don’t understand.”

Phil Spencer

As co-presenter of the long-running Channel 4 series Location Location Location, he has become one of the best-known faces on British television and is widely regarded as an expert on all things property. Outside of television, he has published three books and founded the property advice site Move iQ.

What types of restrictive covenants are there?

Most restrictive covenants relate to the use of the land, says Liz Williams. “For example, they might prohibit you from keeping livestock. On older properties, pigs are a favourite!”

Some of the most common restrictive covenants prevent the owner from making major structural changes to a property, such as converting a house into flats, adding an extension or loft conversion. This could be a problem if you want to extend or use or sell any of the land for development.

Restrictive covenants might also prevent the installation of large structures, such as garden buildings. They can also forbid adding smaller things like security cameras or a satellite dish.

“Some of the most surprising can be to do with religious restrictions, such as not using the land for the production of ammunition or arms,” says Liz Williams.

Restrictive covenants can also demand that certain kinds of businesses are not operated from the house. For example, a house originally built by a brewery might prevent the property having its own bar, even for personal use.

This type of legal restriction might prevent the owner from renting out the property, either long-term of through Airbnb. It might also prohibit the parking of commercial vehicles, a boat or caravan on the driveway; this is common with leasehold properties.

“I’ve even heard of covenants that limit the number or type of pets that can be kept, or the playing of musical instruments, at the property,” says Phil Spencer. “Or hanging washing on a balcony,” adds Liz Williams.

Can a restrictive covenant devalue a house?

“The short answer is maybe,” says Phil Spencer. “Restrictive covenants ‘run with the land’, meaning they don’t just apply to original owners, but to future ones too.”

However, the impact of a restrictive covenant will depend on what restrictions are. “If the restrictions are esoteric – like say a prohibition on keeping big cats in the garden – they’re unlikely to matter,” he adds. “But the more restrictive, the more they matter.”

So, if the restrictive covenant forbids extending the house, or the erection of anything on the roof – such as solar panels – its presence might make the property unattractive to potential buyers.

However, always remember restrictive covenants can be challenged or overturned if they are found to be unreasonable, says Phil Spencer, or if they conflict with other legal obligations such as planning laws. This isn’t easy; but feasible (see below).

“In such cases, a court may decide to modify or discharge the covenant,” he explains. “You’ll need legal help if you want to do this, but good solicitors will give you a clear idea of the price and work on a no sale/no fee basis, which means you can guarantee you’ll be getting value for money.”

Can a restrictive covenant be removed?

Restrictive covenants can be removed, but normally only with the consent of the person or their successor (the surviving beneficiary of a will or relative) who put the covenant in place.

“My advice is walk away if it’s too onerous, or take indemnity insurance (see below),” says Liz Williams. “Removing a restrictive covenant is too painful unless there is a lot of money at stake. Even then it’s a gamble.”

“You need to be able to identify and contact them, or removing it is normally a non-starter,” she says. “If you do know who they are, then they have to agree to the removal and there is normally a “release fee” which is not defined.”

If you can’t find them, or there is a dispute, you can go to a court, known as the ‘Upper Land Tribunal’, to apply. This can be a very lengthy and expensive process, and is not normally considered worth the trouble, according to Liz: “If there is no sign of anyone who could benefit, some cash buyers may take a risk, but normally an insurance policy is taken out in case a claim ever arises. Your solicitor can normally obtain a quote for you for the insurance.”

One recent case in 2022, was Cheung & Anor v Mackenzie. This related to a single property, 444 Selsdon Road, south Croydon, Surrey, carrying a 1947 restriction.

The covenant prevented building on the site “except one detached dwelling house”. The purchaser wanted to develop for flats. This particular case went all the way to the High Court, and an appeal, before the applicant successfully had agreement from the courts, who ruled a ”deed of modification” was permissible.

“It wasn’t straightforward at all, and relied heavily on interpretation of wording,” says Liz Williams.

Should you buy a house with a restrictive covenant?

According to Liz Williams, the factors you should consider when buying a house with a restrictive covenant are:

• What the restriction stops you doing with the property – will you still be able to use the house for the purpose you wish?
• Does the restriction affect all of the land and buildings or only part of it?
• Does it matter to you over and above how much you like the house?
• Would it stop you using the land or property as you want to do?
• Will it matter to any future purchaser when you want to sell?
• Do you want or need to get the restriction removed? Is this possible?
• Who benefits from the restriction? Are they, or their successors, still alive, traceable and contactable?
• Has the valuation of the property taken into account the restriction?
• Do you need indemnity insurance – usually costing a couple of hundred pounds – if you proceed to purchase, in order to secure a mortgage, or simply to minimise risks? Or will you take a view and proceed anyway (normally this is for cash buyers only)? “Please note, a breach of a restrictive covenant can result in legal action against you,” Liz warns.
• Are you buying at the right price? Should you ask for a discount or for the seller to pay for any indemnity insurance because of the restrictions?

FAQs

Is it difficult to sell a house with a restrictive covenant?

If you’re selling a home with a restrictive covenant, you are obliged to declare it at the earliest reasonable opportunity, typically when you advertise your home for sale.

This would be part of ‘Material Information’, which is part of the National Trading Standards guidance requiring all information provided in a property listing to be accurate, truthful, and not misleading.

“The impact of any covenant on the saleability of your home will depend on what the restrictions are,” says Phil Spencer. “Some mortgage lenders can be wary of lending on a property that has very strict covenants. Buyers should take advice from their solicitor about how restrictive or enforceable the clauses are.”

If you’re selling and have knowingly – or unknowingly - breached any covenant yourself during your ownership of the property, it might be worth taking out restrictive covenant insurance, Phil advises.

“This helps minimise your risk, as in the event the covenant is challenged, it can help cover any legal costs defending your actions.

“Bear in mind this indemnity insurance will only apply if you’ve breached the covenant for 12 months and haven’t been challenged.

“The most important step to take is to seek legal advice, so ensure you speak to your solicitor if you’re in this situation.”

What is the 12-year rule for restrictive covenants?

The 12-year rule for restrictive covenants relates to the Limitation Act 1980, which states legal action must be taken within 12 years of a breach of a restrictive covenant. “The time limit starts from the date of the breach occurring, not the date of the deed of the land was made,” Liz Williams explains.

Are restrictive covenants enforceable after 20 years? “Yes, they are but it is much more difficult to enforce,” advises Liz. Bear in mind too, The Limitation Act 1980 states that claims in land should be brought within 12 years, and this will likely apply.

Liz Williams adds: "Always seek truly independent legal advice from a SRA registered legal professional. None of this article represents legal advice."