Following two viewings of a semi-detached, three-bedroom property in Hathersage, Derbyshire, Malcolm Newgent agreed to buy the property from the elderly owner. And, with no chain, there was nothing to hold up the sale; until he discovered restrictive covenants had been put in place by the previous owners.
Speaking to The Telegraph, Newgent commented: ‘I instructed a surveyor to carry out a structural survey, which cost me about £350. As soon as I received his report, which was satisfactory, I told my solicitor to proceed. I went to see the property twice more to discuss fixtures and fittings, but at no time was there any hint about what was about to transpire.’
It was only when he started to conduct more thorough investigations that Malcolm discovered two restrictive covenants had been placed on the property by the previous owners, who now lived next door.
‘Neither the woman selling the property, nor the agent mentioned anything about this,’ he explained. ‘I don’t blame the vendor – as she did say afterwards that her late husband had dealt with the couple’s purchase and she knew nothing of the details – but I do blame the system.’
It was revealed that having built a new property in the garden of their original one, the previous owners sold their home but not before placing covenants on it to restrict any future owners from building an extension and thus affecting the view from their new property.
Malcolm went on to say, ‘We went to see the previous owners in the house next door, to ask if they would take off the covenants, but they refused. They said the covenants contributed to the value of their present house and they wanted to keep in control of that. We asked them if, when they sold the house, they would reverse the covenants, but they refused again.
‘I understand that they would like to maintain the view, which looks down the valley to the church and out to the dales, but it is the principle,’ Malcolm says. ‘If they owned and lived in the property, that’s one thing; but how can somebody control something they used to own? It doesn’t seem right.
‘It all goes back to the fact that all information regarding a property should be available to anyone who wants to buy it right from the beginning. It should not be up to the prospective purchaser to find it out later for themselves.’
This situation has consequently left Malcolm £550 out of pocket and with a lot of wasted time. The house itself was instead sold to his under-bidder for £5,000 below his offer.
What You Need to Know About Covenants When Buying a Property
Unfortunately, Malcolm isn’t the only person to be affected by these hidden covenants as it is an incredibly common problem for house buyers.
Many landowners will put covenants in place when selling off parts of their land as it is a way of retaining value within the parts they are keeping. These covenants are often in place on a lot of new estates.
By purchasing the title documents for a property you are considering purchasing, you could save yourself a lot of time and money. These documents will indicate if there are any covenants in place on the property you are looking at and will include restrictions on performing certain actions as well as any obligatory actions that you may need to perform.
It is not only important to know about these covenants before buying so you know if you are restricted in any way, but also because failure to comply with them can lead to legal action. If covenants are ignored, the beneficiary can seek out an injunction and may also look at compensation for this breach of terms.
You can find more information on the law on Covenants here, it a good e-booklet on the related laws.
What to do if the Property has Covenants
Should you find that there are covenants in place on the property, there are several options you can look into to get around these.
Firstly, if the covenant was put in place many years ago and it is no longer clear who will benefit from it (i.e. the neighbourhood may have changed) then it may be the case that this covenant just won’t require enforcement.
Sometimes, it is possible to make an appeal to the Lands Tribunal to have the restriction removed, or a single-premium indemnity policy granted. However, neither of these two options would have been available for Malcolm Newgent, as the beneficiaries of the covenant were known and he therefore would remain bound to the covenant.
Ultimately, understanding what covenants are in place on a property you are looking to buy is critical, as they could affect the enjoyment, value and use of the home. And, with it not always being clear from the off-set if these are in place, it is always worthwhile doing your own investigations and purchasing title deeds before agreeing to any sales or enlisting a conveyancer. For the fraction of money it costs, it could be a safeguard from far greater financial implications.