Restrictive covenants and holiday homes, a precarious mix
In Stafford Flowers v Linstone Chine Management Company Ltd  EWCA Civ 202, the Court of Appeal ("CA") has considered whether to discharge a covenant which restricted the use of holiday lettings to certain periods of the year.
A number of bungalows were built in the 1980s for holiday use in the Isle of Wight and each bungalow was subject to a restrictive covenant that prevented its use to certain periods of the year only. This reflected a condition of the original planning permission. Mr Stafford Flowers ("the Applicant") and his wife bought one of the bungalows in 1998 and continue to live there all year round, in breach of the covenant.
In 2012, the Applicant applied for and obtained a Certificate of Existing Lawful Use ("CLEUD"), which confirmed that the use of the property was lawful for planning purposes. The Applicant then made an application to the Upper Tribunal (Lands Chambers) ("UT") to discharge the covenant from the registered title.
The UT has discretion as to whether to discharge or modify a covenant if an applicant can make out one of the grounds set out in section 84 of the Law of Property Act 1925, which include that the covenant is obsolete or impedes some reasonable use of land. The Applicant argued the covenant was indeed obsolete and or impeded reasonable use of the land however to succeed in this argument, the UT must also be satisfied that the covenant does not secure any practical benefits to the beneficiaries of the covenant or any substantial value or advantage.
The UT originally modified the covenant to limit the restriction to overnight use during the restricted weeks but would not discharge the covenant, as by doing so, it considered that it may result in a change in character of the development. This was notwithstanding that others were also occupying bungalows on the same development all year round similar to the Applicant.
On appeal, the CA considered that by allowing the discharge of the covenant, current and future owners of properties may make similar applications to discharge the covenants which affect other properties on the development and this would undermine the protection offered by the covenant. Whilst the Applicant had been successful in showing the covenant impeded the reasonable use of the land, he had failed to show that the covenant did not secure any practical benefits or advantages to the beneficiaries of the covenant. There was a benefit to being able to enforce the covenant in order to protect the character of the site.
As anticipated, the case further highlights the uncertainties in such applications and will focus the minds of land owners to consider their obligations to comply with restrictive covenants. The fact that use of a property is lawful from a planning perspective will not of itself result in an application to discharge a covenant being successful. Whenever a covenant is stated to affect land, careful consideration of its enforceability is crucial.
Posted on: 06/04/2017
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.
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