Covenants stopping development

[hech123]

Hi. I recently purchased a house which had a very large garden, about 1 acre. There a covenant not to build on most of this but the previous owner had built a large garage. The covenant is from over 60 years ago but none the less we took out covenant insurance to cover this. If I decided to build again on this land, possibly 4-5 houses could I take out covenant insurance to cover this before I actually built?

[Lawcruncher]

Whether you can secure cover depends on whether there is an insurance company prepared to grant it. Whether they will grant cover, and if so the amount of the premium, depends on how you answer the questions they pose.

Whilst the age of a covenant is a factor it is not decisive. A covenant can be deemed obsolete even if imposed quite recently and an ancient covenant is not obsolete merely because it is ancient.

[JK0]

I dare say you can, but if I were the insurer I would want thousands for such insurance.

Have you considered tracking down the beneficiary('s children) to see if you can agree an amount for the covenant to be lifted? I bet that would be cheaper than the insurance.

[Lawcruncher]

The OP's specific question was whether he could procure insurance. A wider question is whether he needs insurance, i.e. whether the covenant is enforceable and if so by whom. That is not a question which is easily answered.

[pilman]

What many people fail to take into account is that a restrictive covenant has to be for the benefit of land, not for the benefit of the person who originally sold the plot that is now burdened with the covenant..

The first thing to consider when deciding whether to ignore a covenant is to ascertain the land that has the benefit.
Then ascertain whether any development that is contrary to the restrictive covenant will have an adverse effect on that land.

I recently saw a practical application of that process when I assisted someone who had bought an ex-council house with a restrictive covenant to use it as a single dwelling only.

Planning permission had been obtained to erect a new house alongside the original and a request had been made to the council as land-owner of a nearby property to allow the new build to go ahead.
Permission would be granted as long as £40K premium was paid to remove the covenant.

I found out that the other half of the semi detached pair of houses was the only council owned property that could possibly have the benefit of the covenant because all other council owned properties were too far away to be affected if a new house was to be built alongside the one that had a very wide side garden.

That other half of the semi detached pair which was still owned by the Council already had a detached house built alongside it and the new house would have no impact on the existing benefitted house as it would not be possible to see the new house from that house once the new one was built alongside the other part of the semi detached pair.

Understanding that was why the owner with the property with planning permission pointed out to the Council that since there was no detrimental affect on the benefitted property then there would be no damages due if the restrictive covenant was disregarded so that there would be a breach of covenant.

At that point the council backed down completely and just wrote a letter stating consent was given to erect the new house.

Unless damage is caused to the property with the benefit of a restrictive covenant it is unlikely that a court action for breach of covenant will result in anything other than nominal damages.

The other alternative to seeking insurance cover, which is when the underwriters will undertake the same exercise as described above, is to make an application to the Lands Tribunal to have the restrictive covenant amended or removed.
There is a legal procedure to do that under Section 84 of the Law of Property Act 1925.
Someone contemplating development of four or five houses would be well advised to seek an opinion as to whether that would be sensible.

One other point to consider is that the insurance underwriters do understand how weak any claim for breach of covenant would be, so that is why Indemnity Insurance sometimes does not cost a lot of money compared to the profits that can be made.

If land-owners want a share of future profits, then imposing restrictive covenants is not often the answer.
Including an uplift clause is now considered more effective, which is why someone selling off land with future potential now takes that course of action.
That way they don't even need to retain land that would have the benefit of any restrictive covenant inserted into a conveyance.

[hech123]

Excellent replies. I will do some research but many thanks for pointing me in the correct direction. I feel it would be un enforceable as the only property it would really impact would be my own, although it would over look some grass land. All I need to do now is persuade the wife that we should build 5 houses in the garden, that is going to be the toughest task of all!