Releasing Restrictive Covenants

Alexander Devine Trust v Millgate 2018

What is a restrictive covenant on land?

A restrictive covenant over land is a contract which runs with the land, and prevents that owner from doing certain things (usually relating to development or use).

How is a restrictive covenant released / modified? Aside from agreement between the parties, the only way to release or modify a covenant is to apply to the lands tribunal under section 84 of the Law of Property Act 1925. The lands tribunal can remove or modify a covenant if it is obsolete or is contrary to the public interest.

What happened in this case? Millgate, a housing developer, built affordable housing on land which was burdened by a restrictive covenant preventing any development. The neighbouring children's hospice held the benefit of the covenant. After practical completion, Millgate applied to the lands tribunal to modify the covenant, allowing the development to stand.

What were the arguments in the case? Millgate argued that the area was in need of affordable housing and that is was contrary to the public interest to force the demolition of the houses. Money was adequate to compensate the hospice.

The children's hospice argued that the terminally ill children needed peace and quiet and a nice view. Their outside space had been designed with that in mind.

What was decided? The lands tribunal found that, while Millgate acted terribly, the public interest in affordable housing was stronger than the hospice's need for peace and quiet.

On appeal to the Court of Appeal this was overturned and the hospice won. The public interest was served by developers seeking to modify the covenant before carrying out building works.

What have we learned? The Upper Tribunal's power to release or modify a restrictive covenant is discretionary. If you want the tribunal's assistance you should apply long before a spade hits the ground.

What else should I consider? Not all restrictive covenants are enforceable, so the first step is to take expert legal advice.