Restrictive Covenants - Good news for owners of Ex-Council Houses.

A recent Lands Tribunal decision upheld by the Court of Appeal will provide welcome news to ex-Council House owners whose property is subject to restrictive covenants.

The case involved land previously owned by the local Authority which had been sold subject to a restrictive covenant that prevented use other than as a coach depot and associated residential bungalow.

A Planning Application for Residential Development was submitted to the same Local Authority and was refused by them but then approved on appeal by the Secretary of State. The Council's Estates Department then refused to permit the development on the basis of the restrictive covenant that had been imposed prohibiting residential use other than the coach depot and bungalow and also refused to agree to modification of the restrictive covenant.

The Lands Tribunal was asked to consider modification of the covenant under Sec 84 (1) of the Law of Property Act 1925. The Lands Tribunal considered that the covenant impeded the reasonable use of the land and did not entitle the Local Authority (as the legal person entitled to the benefit of the covenant) to any practical benefit of substantial value and therefore discharged the covenant. Some compensation was awarded to the Local Authority, being the difference in the value of land with and without the covenant at the time the covenant was imposed.

If you have property which is subject to restrictive covenants imposed by the Local Authority and the same Local Authority makes Planning Permission available for development, including alterations, then this decision may well allow a sustainable argument that the covenants imposed by the Local Authority are ineffective.

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