Restrictive covenants are binding agreements that can have a significant impact on leasehold flat owners in the UK. In this comprehensive Strangford Management guide, we will explore what these covenants are, why they are used, how they can be enforced, and what happens when a leaseholder breaches a restrictive covenant.
We’ll also cover how to remove or modify restrictive covenants, the legal implications of breaching covenants, and the steps leaseholders should take to comply with their lease agreements.
What is a Restrictive Covenant?
A restrictive covenant is a legally binding agreement, often written into the property transfer or lease by the developer or landlord/freeholder. They impose restrictions on the leaseholder’s use and occupation of the property or land, sometimes preventing certain alterations or activities from taking place.
Examples of Restrictive Covenants
Some common examples of restrictive covenants found in leasehold flats include:
- Not to carry out major alterations to the property without the landlord’s consent
- Not to sub-let the property without the landlord’s consent
- Not to use the property for business purposes
- Not to keep pets without the landlord’s consent
- Not to install satellite dishes or other external fixtures without the landlord’s consent
- Restrictions on the type of flooring allowed
- Restrictions on vehicle parking and storage
- Prohibitions on creating noise nuisances
Why are Restrictive Covenants Used?
Restrictive covenants are used by developers and landlords/freeholders to ensure compliance with planning conditions, preserve the appearance and value of the development, and prevent potential nuisances to other properties within the development. They can help maintain a consistent and cohesive visual aesthetic, as well as protect the interests of all leaseholders within the development.
Do Restrictive Covenants Only Apply to New Builds?
Restrictive covenants can be included in any property transfer or lease, not just new builds. Older properties may also contain restrictive covenants, which can still be enforced today. Generally, there is no time limit on when a restrictive covenant can be enforced, although some may become unenforceable over time due to changes in circumstances or the original landlord or freeholder being untraceable.
What Happens if a Leaseholder Breaches a Restrictive Covenant?
If a leaseholder breaches a restrictive covenant in their lease, they may be subject to legal action by the landlord or management company. This can include being forced to undo the breach (e.g., removing an unauthorised fixture such as wooden flooring) or facing financial penalties. In some cases, a landlord may even have the right to forfeit the lease, effectively evicting the leaseholder from the property.
Legal Implications and Remedies
When a leaseholder breaches a restrictive covenant, the landlord may have several legal remedies available, such as:
- Seeking damages for any financial loss caused by the breach
- Obtaining an injunction to prevent further breaches
- Forfeiting the lease and taking possession of the property
Before taking any legal action, a landlord must typically serve a “Section 146 notice” under the Law of Property Act 1925, which details the alleged breach and gives the leaseholder an opportunity to remedy the issue.
How Can Leaseholders Avoid Breaching Restrictive Covenants?
To prevent breaching restrictive covenants, leaseholders should familiarise themselves with the terms of their lease and ensure they comply with all covenants. This may include obtaining written consent from the landlord for certain activities or alterations, or adhering to specific rules regarding property use and maintenance.
Sub-letting and Compliance
If a leaseholder decides to sub-let their property, they should ensure their tenants are bound by the covenants contained in the lease and conduct regular inspections to ensure compliance. The leaseholder should also ensure their address for service is up to date at the Land Registry to receive any notices related to their property.
Removal or Modification of Restrictive Covenants
In some cases, leaseholders may wish to remove or modify a restrictive covenant in their lease. This can be done through negotiation with the original developer or landowner, or by applying to the Upper Tribunal (Lands Chamber). However, this process can be lengthy and costly, and leaseholders should consult with a specialist solicitor before pursuing this option.
Are Restrictive Covenants Always Enforceable?
Generally, restrictive covenants are enforceable, but there are some exceptions. For instance, it may be difficult to enforce a covenant after 20 years have passed. Additionally, the Limitation Act 1980 states that claims relating to land should be brought within 12 years of the breach occurring.
Seeking Legal Advice
If you are a leaseholder facing potential legal action due to a breach of a restrictive covenant, it is crucial to consult with a solicitor experienced in property litigation. They can help you understand your rights and obligations, identify potential defences, and navigate the complex legal process. We at Strangford Management work with several specialist firms and we would be happy to direct you to them as long as they haven’t acted for your landlord/freeholder previously.
Conclusion
Restrictive covenants play an important role in preserving the value and enjoyment of leasehold flats in the UK. By understanding and complying with the covenants in their lease, leaseholders can avoid costly disputes and help maintain a harmonious living environment within their development. If you have concerns about restrictive covenants or are facing potential legal action, it is essential to seek expert legal advice to protect your rights and interests. Speak to our property experts today to discuss your lease terms and how this may have an impact on your future actions.
