Jason Tann is head of commercial real estate and Christobel Smales is senior associate, commercial real estate, at Pemberton Greenish
With the housing crisis at the top of the agenda for 2018, the pressure to build is unrelenting. Yet even once planning permission has been obtained, developments can remain contentious, with sites frequently subject to restrictive covenants impinging development.
Covenants of debatable enforceability can often be dealt with by defective title insurance. If insurance is not available or agreement cannot be reached, an application can be made to the Upper Tribunal (Lands Chamber) for the modification or discharge of a restrictive covenant. A release or modification can be sought if a change in the character of a neighbourhood means the covenant has become obsolete; the covenant impedes some reasonable use of the land; or the covenant in question no longer secures any practical benefit.
The good news for developers is that as the need to deliver homes increases, there will be more pressure to ease conflict between private covenants prohibiting certain types of use or development on the one hand, and on the other, planning permissions that have determined such use or development acceptable.
Derreb v Blackheath Cator Estate Residents , which considered the relationship between a restrictive covenant and planning policy is a case in point. The restrictive covenant limited the use of the land to a sports ground or the construction of detached residential houses. However, local planning policy made it clear appropriate residential development should be of substantial density to address the housing shortage, so a development entirely of detached houses would not receive planning approval. Therefore, it was held that a mixed residential development was a reasonable use of the land and should be allowed with modifications to the restrictive covenant.
Developers should take heart that policy drivers for efficient land use and optimum density schemes are likely to ease the process for seeking modification to existing covenants, reducing the extent to which these act as a barrier to development. That said, not only does the application process remain cumbersome and time consuming but an applicant developer will usually be ordered to pay the costs of objectors and compensation to the beneficiary of the covenant.
Unlike a right-to-light scenario, compensation is only payable on the basis of the loss suffered by the beneficiary. However, this cost, together with the uncertainty of whether the process will produce a successful outcome, needs to be considered when assessing the viability of a site burdened by a covenant.