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If you are buying, selling, or developing a property in the UK, there is a good chance you will come across the phrase “restrictive covenant” at some point during the conveyancing process. For many buyers and property owners, this can feel like an unwelcome surprise, raising questions about what you can and cannot do with the property.
The good news is that restrictive covenants do not have to derail your transaction. With the right understanding and the right insurance in place, you can move forward with confidence. This guide explains what restrictive covenants are, how they affect your property, and how restrictive covenant insurance from Title Policies can protect you when the unexpected arises.
What Is a Restrictive Covenant?
A restrictive covenant is a legally binding obligation written into a property’s title deeds that restricts what the owner can do with that land or building. Unlike a planning condition, which is imposed by a local authority, a restrictive covenant is a private agreement, usually created when land was originally sold or developed.
Common examples include:
- A prohibition on building additional structures or extensions without consent.
- A requirement to use the property only as a single residential dwelling.
- A ban on running a business from the premises.
- A restriction on keeping certain animals or vehicles on site.
- An obligation not to alter the appearance of the property without approval.
Once registered on the title, a restrictive covenant usually “runs with the land.” This means it passes from one owner to the next, regardless of how many times the property changes hands.
Why Do Restrictive Covenants Exist?
Restrictive covenants are usually created by a developer or landowner who wants to maintain control over how neighbouring land is used, even after it has been sold. A developer might impose them across an entire estate to ensure uniformity of appearance. A farmer selling off a field might use them to prevent commercial development that could affect the remaining land.
Over time, the original reasons for a covenant may become less relevant. The person or organisation who originally benefited from it may no longer exist, or the surrounding area may have changed significantly. This is where complications can arise.
What Happens When a Restrictive Covenant Is Breached?
If a property owner breaches a restrictive covenant, deliberately or unknowingly, the person with the benefit of that covenant (the “covenantee”) can take legal action. This could result in:
- An injunction requiring you to undo any works carried out.
- A court order demanding reinstatement of the original state of the property.
- A claim for financial compensation.
The difficulty is that, in many cases, property owners are not even aware a covenant exists until conveyancing searches bring it to light. And in some situations, older or forgotten covenants surface only once a buyer or lender raises a concern.
Breaches can range from minor oversights, such as a garden shed that technically requires consent, to more significant issues like a residential property being used commercially, or an extension built without the covenant holder’s approval.
Can a Restrictive Covenant Be Removed or Modified?
Yes, in some circumstances, but the process is not always straightforward.
Negotiated release: If the original covenantee or their successor can be identified and contacted, it may be possible to negotiate a formal release or modification, usually for a fee.
Application to the Upper Tribunal: Under section 84 of the Law of Property Act 1925, you can apply to the Upper Tribunal (Lands Chamber) to have an obsolete or unreasonable covenant modified or discharged. However, this process can be costly and time-consuming, and there is no guarantee of success.
Indemnity insurance: In many cases, the most practical and cost-effective solution is to obtain restrictive covenant indemnity insurance, which protects against the financial risk of a covenant being enforced.
How Does Restrictive Covenant Insurance Work?
Restrictive covenant insurance is a type of title insurance that protects the insured, usually the property owner and their mortgage lender, against the financial consequences of a covenant being enforced.
A policy typically covers:
- Legal costs in defending any claim brought by the covenantee.
- Any compensation ordered by a court.
- The cost of reinstating the property if required.
- Any diminution in the value of the property arising from the enforcement of the covenant.
Policies are usually taken out as a one-off premium and remain in force in perpetuity, passing to future owners. This means they can also reassure buyers and lenders at the point of sale.
At Title Policies, we specialise in arranging restrictive covenant insurance quickly and efficiently, including for urgent transactions. Our team understands the pressures of the conveyancing process and works to provide cover that keeps your transaction on track.
Get a quote for Restrictive Covenant Insurance from Title Policies today
When Is Restrictive Covenant Insurance Appropriate?
This type of insurance is typically recommended in the following situations:
A breach has already occurred. If works have been carried out in breach of a covenant and the risk of enforcement is considered low, insurance can protect the owner and any future buyers or lenders.
The original covenantee cannot be traced. If it is unclear who currently holds the benefit of the covenant, or if they appear to have abandoned the interest, insurance can bridge the gap.
The covenant is old and unlikely to be enforced. Many covenants date back decades and relate to circumstances that no longer apply. While this reduces the practical risk, lenders and buyers may still require protection before proceeding.
A lender requires it as a condition of the mortgage. Many mortgage lenders will not lend on a property with a known restrictive covenant issue unless indemnity insurance is in place.
A sale is time-sensitive. Pursuing a formal release or tribunal application takes time. Insurance can allow a transaction to complete while the issue is managed separately.
What Title Insurance Cannot Do
It is worth being clear that restrictive covenant insurance does not remove or extinguish the covenant itself. The restriction remains on the title. What the policy does is protect the insured against the financial consequences if the covenant is enforced.
For this reason, it is not a substitute for taking proper legal advice. Your solicitor will assess the specific wording of the covenant, the likelihood of enforcement, and whether insurance is the right approach for your situation.
Common Questions About Restrictive Covenants
Can I find out if my property has a restrictive covenant? Yes. A search of the title register held by HM Land Registry will show any registered restrictive covenants. Your solicitor will carry this out as part of the conveyancing process.
Do restrictive covenants expire? No, not automatically. Unlike planning permissions, restrictive covenants do not have a fixed lifespan. However, a covenant may become unenforceable over time if the person with the benefit can no longer be identified, or if circumstances have changed significantly.
Does planning permission override a restrictive covenant? No. Planning permission and restrictive covenants are entirely separate legal frameworks. Obtaining planning permission for an extension does not mean you are free to ignore a covenant that prohibits it.
Who pays for restrictive covenant insurance? This is usually negotiated between the buyer and seller. In many cases, the seller provides the insurance as a condition of the sale, particularly where the breach occurred during their ownership.
How much does restrictive covenant insurance cost? Premiums vary depending on the nature and age of the covenant, the value of the property, and the level of cover required. Title Policies can provide a quote promptly, and in many cases policies are available at a competitive one-off cost.
The Role of Title Insurance More Broadly
Restrictive covenants are one of several title risks that can affect a property transaction. Title insurance, as a broader category, covers a wide range of defects and uncertainties that may not be resolved by standard conveyancing searches alone.
These include issues such as:
- Rights of light disputes.
- Chancel repair liability.
- Missing or defective planning permissions.
- Boundary disputes.
- Adverse possession claims.
- Search indemnity where searches cannot be obtained in time.
A comprehensive title insurance policy can provide a valuable safety net, both for residential and commercial property transactions.
Explore the full range of title insurance products from Title Policies
Further Reading
If you found this article useful, you may also want to explore these related guides from the Title Policies blog:
- Title Insurance Explained: What Every Homebuyer Needs to Know – A comprehensive overview of title insurance for residential buyers.
- What Happens If a Property Has a Defective Title? – Understanding what a defective title means and your options.
- The Hidden Risks: 5 Title Problems That Could Cost You Thousands – A practical guide to the most common and costly title issues.
- When Lenders Require Title Insurance (And Why) – What to expect when your mortgage lender insists on a policy.
- Navigating Title Defects: Realities of Title Insurance Coverage – A closer look at what title insurance does and does not cover.
- Will Title Insurers Provide Cover for Any Title Defect? – Exploring the scope and limits of title insurance policies.
Ready to Protect Your Property?
Whether you are a solicitor advising a client, a buyer facing a covenant issue, or a lender seeking assurance, Title Policies can help. We provide fast, competitively priced restrictive covenant insurance and a full range of title indemnity products for residential and commercial transactions across the UK.
Contact Title Policies for expert advice and a competitive quote
Call us on 01782 712224 or email enquiries@titlepolicies.co.uk
Title Policies is a trading division of Nviro Insurance and Risk Management Ltd, 1st Floor Offices, 36 Hanover Street, Newcastle-under-Lyme, Staffordshire, ST5 1AU.