I have seen a recent case called Lamble V Buttaci in 2018. The applicants, who can be considered as property developers for want of a better description, wanted to build three new structures on their property – a house, a garage and a large summer house. The neighbours objected to this because of the effect the new buildings would have on their privacy and views.
Reliance was placed on restrictive covenants which prevented the applicant erecting any buildings on their land without first obtaining the neighbours’ written approval. The neighbours refused to approve the applicants’ plans.
The applicants applied to the Lands Tribunal to modify the restrictive covenants under (aa) of Section 84 of the Law of Property Act. They argued that the restrictions impeded a reasonable use of the land and conferred no practical benefits of substantial value on the neighbours’ land. They also argued that money would be an adequate compensation.
The Tribunal concluded that they would modify the covenants to permit the construction of the replacement house and garage (but not summerhouse) upon payment of compensation of £50,000 (being 2.245% of the value of the neighbours’ property).
The case is interesting because it shows that it was not necessary for the applicant property developers to apply to the Court for a declaration that consent had been unreasonably refused by the neighbours. Rather the developer applied direct to the Tribunal to modify the covenant under section 84.
Additionally, it seems, from the flow of cases that is coming out of the Lands Tribunal, that the Lands Tribunal is more prepared to allow developers a successful modification of restrictive covenants. However, possibly only on often with a payment of compensation.
This recognises the fact that, for example, where additional construction of residential units is involved and modification of the restrictive covenant will allow this development, the Lands Tribunal is prepared to recognise that there is a shortage of housing. They also recognise that modification of the covenant serves a public purpose in providing much-needed housing.
The quid pro quo for modification of the covenant, in recognising this public policy, is the fact that the applicant property developers may have to pay compensation. It will be interesting to see in the future how cases develop on how compensation should be properly calculated.
We have practical experience of these cases.
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