Understanding Restrictive Covenants When Buying a Property
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When buying a property in the UK, one aspect that often goes unnoticed is the presence of restrictive covenants. These legal restrictions are put in place to limit how a property can be used or developed, and they can have a significant impact on your plans for the property. In this article, we’ll explore restrictive covenants in detail, offering you a distinct perspective on what they mean for homebuyers.
What Are Restrictive Covenants?
At their core, restrictive covenants are agreements tied to a property that impose certain limitations on its use. These covenants might be present in the deeds of a property or recorded in planning documents. They could prevent you from making alterations to the property, constructing certain types of buildings, or even using the property for particular commercial purposes. While they may sound restrictive, these covenants can also offer protection and clarity, especially when they’re aimed at preserving the character of a neighbourhood or preventing disputes between neighbours.
But should these covenants stop you from buying the property? Not necessarily. However, they should be considered carefully as part of your due diligence process.
Why Are Restrictive Covenants Placed on Properties?
There are various reasons why restrictive covenants exist. Often, they’re implemented to protect the value of surrounding properties and maintain a sense of uniformity in a neighbourhood. A common example might be a covenant that prevents the construction of large buildings or extensions that could block the view of a neighbouring property. Other covenants might prevent certain commercial activities, like running a business from home, in order to preserve the residential nature of the area.
What’s important here is to recognise that, while these covenants exist to protect interests—your own included—they can also restrict you in ways that might not have been anticipated when you first considered buying the property. So, what happens when you purchase a property and later discover that a restrictive covenant limits how you can use it?
Common Examples of Restrictive Covenants
No Alterations to the Exterior: Many properties, especially those in conservation areas or historical locations, have covenants that prevent the alteration of the exterior, including changes to windows, doors, or even the colour of paint. This can restrict your ability to renovate or modernise the property.
Use of the Property: Some properties might be subject to covenants that prevent certain types of use, such as turning a residential home into a business or renting out a property as a holiday let. These restrictions may be aimed at preserving the residential nature of a street or preventing overcrowding.
Building Restrictions: Some covenants prevent you from building extensions or adding new structures, such as sheds or garages. These restrictions can be a serious issue if you plan to modify the property in the future.
But what about situations where you didn’t anticipate any restrictions? What happens when you buy a property thinking you have free rein, only to find that your plans are suddenly halted?
How Do Restrictive Covenants Affect Home Buyers?
Before you sign the dotted line on a property purchase, it’s essential to understand how restrictive covenants could impact your future use of the property. These covenants are often recorded in the land registry or the deeds of the property, but they may not always be clearly visible. It’s important to dig a bit deeper during your property searches or speak with a solicitor to uncover any hidden restrictions.
The potential complications these covenants bring may not be obvious at first glance. Imagine buying a home with the intent to convert it into a rental property, only to discover that a covenant prohibits this. Or perhaps you buy a house with plans to extend it, but the covenant prevents any construction beyond the existing footprint. It’s scenarios like these that can derail your long-term property goals, making it crucial to assess any covenants early in the buying process.
One overlooked aspect is the possibility that a restrictive covenant might not be enforceable if the party benefiting from it no longer exists, or if it has become obsolete. Some covenants have expiry dates or may be unenforceable after a certain period, which could present an opportunity if you're buying in an area where such covenants were set many years ago.
What Can You Do About Restrictive Covenants?
If you’ve already fallen in love with a property but discover a restrictive covenant, there are a few options to consider:
Seek a Modification or Removal: In some cases, it’s possible to negotiate the removal or modification of the restrictive covenant. This process can be lengthy and requires legal expertise, but it’s worth considering if you have strong reasons for needing to alter the property.
Look for Exceptions or Loopholes: Occasionally, restrictive covenants are written with exceptions that allow certain changes or uses. For example, a covenant might allow for alterations if they meet specific guidelines, or it may apply only to certain parts of the property.
Plan Around the Restriction: If the restriction isn’t a dealbreaker but still affects your plans, you might need to rethink your property strategy. This could mean adjusting your renovation or usage plans to comply with the covenant.
Have you considered how a restrictive covenant might affect not just your immediate plans, but your long-term vision for the property? It’s an aspect to weigh carefully.
Is It Worth Purchasing a Property with Restrictive Covenants?
There’s no one-size-fits-all answer to this question. If you find yourself in the position of buying a property with restrictive covenants, it’s essential to evaluate whether the restrictions will impede your lifestyle or future plans. If the restrictions are minor, easily worked around, or have expired, the property might still be a solid investment.
However, if the covenants severely limit your use of the property and removing them isn’t feasible, it might be worth reconsidering the purchase. The key is to look beyond the initial appeal of the property and consider the long-term implications of any restrictions.
Final Thoughts on Restrictive Covenants
Buying a property with restrictive covenants isn’t necessarily a dealbreaker, but it’s important to understand what these covenants mean for you as a homebuyer. By doing your due diligence and seeking professional legal advice, you can ensure that you’re fully informed about the implications of any restrictions. At the end of the day, it’s about making a sound investment and protecting your future interests.
By recognising the potential for restrictions, planning ahead, and negotiating where necessary, you can ensure that your dream property doesn’t turn into a nightmare of limitations.
