Does this restrictive covenant prevent HMO development?

by Readers Question

10:49 AM, 27th January 2020
About 2 months ago

Does this restrictive covenant prevent HMO development?

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Does this restrictive covenant prevent HMO development?

I am a first time potential landlord intending to convert our family home for HMO use and have carried out due diligence and am satisfied that the project is feasible other than concern re a restrictive covenant.

The property was built by Shepherd Homes in 2007 who have since been taken over by another business and while still trading are no longer involved in residential property development/ building.

The restrictive covenant contained in the property’s TP1 as stated by Shepherd Homes states ” not to use the property or permit it to be used except as a single dwelling house with appurtenances and not to use the property for any trade or business save that nothing in this clause shall prevent the transferee and other members of the transferees household from working at the property provided that the work does not include visits or deliveries from the property and does not adversely affect the amenity of the residential use of the estate”

I will take formal legal advice but would both welcome and appreciate any thoughts / views on this issue, my apologies for such a lengthy first contribution to the forum and thank you in advance for any assistance given.

Steve



Comments

Steve FLS

10:50 AM, 28th January 2020
About 2 months ago

Reply to the comment left by F1_Fan at 28/01/2020 - 09:56
Hello and thanks very much FL, take your point about the likelihood of my probably being able to press on with the HMO without much likelihood of their being a legal challenge from others but my immediate neighbours are quite wealthy professionals who won't be easily daunted at the prospect of legal proceedings, I can quite understand why they would prefer not to have an HMO so for peace of mind I'll take further legal advice before I go too much further with this, thanks again for your advice,it's much appreciated.

Ian Narbeth

11:02 AM, 28th January 2020
About 2 months ago

Reply to the comment left by Steve FLS at 28/01/2020 - 10:38
Steve
I am a solicitor (qualified 1985) specialising in commercial property. I am also a landlord with a number of HMOs. A solicitor should review the legal title and also that of the neighbours to work out if the benefit of the RC is properly annexed to other land (almost certainly the neighbours). Even if it is, that does not mean you have a problem because, on the face of it, it appears that the RC does not prevent HMO use.

There are a number of good firms in the North East - ring the Law Society for a list. That said, the firm does not have to be geographically close unless you feel you have to visit them personally.

Rob Crawford

16:46 PM, 28th January 2020
About 2 months ago

My understanding is that even as an HMO it is still a "single dwelling" albeit shared by multiple occupants. If each room was self contained, I.e. with own kitchen, shower etc and council taxed; then each room would be deemed a dwelling.

Steve FLS

18:11 PM, 28th January 2020
About 2 months ago

Reply to the comment left by Ian Narbeth at 28/01/2020 - 11:02
Thanks very much Ian, I have identified a direct access barrister in a Newcastle chambers who I will engage if all looking positive after my meeting with the LA HMC officer tomorrow, I'm thinking that it will be money well spent before I go much further, if I'm to engage the barrister I will obtain copy of my immediate / linked neighbours TP1, I'm also checking out the info held by land registry as to which plots were sold when by the original developer as this info might affect things, your advice is much appreciated and kind of you to share your knowledge and direct experience, thank you, Steve

Steve FLS

18:14 PM, 28th January 2020
About 2 months ago

Reply to the comment left by Rob Crawford at 28/01/2020 - 16:46
Thanks very much Rob, that's very much what I'm hoping and if we're right it means that I may have the prospect of a viable HMO, this is all new to me and all advice is very welcome, thanks again ..Steve

Rob Crawford

8:21 AM, 1st February 2020
About 2 months ago

The Barrister is likely to respond by suggesting you ask the developer where the title deeds originated from for there perspective on why the term was used. I think you will find it is a clause used to prevent the building of other dwellings on the same land that was sold with the property. I don't see that you have an issue.

Steve FLS

10:39 AM, 1st February 2020
About 2 months ago

Thanks Rob, since getting hold of the TP1 for my own home I contacted Land Registry to accesss those of my immediate neighbours and have learned that the LR hold info on other documents for both properties which contain more restrictive covenants, have now sent off for this info...in meantime the Local Authority Planning have confirmed in writing that article 4 does not apply to my property but that planning permission is required for change of use, I had a very constructive meeting with the LA HMO officer last week and she is making a site visit 4th Feb, to date nothing from her perspective that is insurmountable. I'm still working on raising the finance and things are progressing. There is still much to be done and the support and advice from yourself and other guys here is invaluable..thanks again Steve

F1_Fan

11:13 AM, 1st February 2020
About 2 months ago

Guys RC's can only be enforced by the person who put it into the title, not the neighbours, and if you have insurance for any future claims, then you are covered as regards any claims or costs. Insurance for this us usually well under £500 so that suggests low claim rates.

HMO use is a planning matter, and the RC has no bearing most of the time (in practice) what you use the property for unless, you have a lender involved. I have HMO's with RC's. If it's up to 6 beds and not in an article 4 area, there is absolutely noting anyone can do to stop you using it as a HMO, after 6 beds you need planning. RC's are not always enforceable also, if they've been breached past 20 or so years and this is something your solicitor can advise you more on as many RC's have already been breached.

Steve FLS

11:44 AM, 1st February 2020
About 2 months ago

Reply to the comment left by F1_Fan at 01/02/2020 - 11:13
Thanks F1, I've done some reading that suggests that the neighbours could have potential to enforce a RC ( there are some that I haven't seen yet) depending on its intent and drafting, until I get the full info from the Land Registry I'm going to keep working on the other strands to the project and if all else looking good will get a barristers view for peace of mind if nothing else, seems to me that this is a potential mine field ( ! ) and I can't afford to risk court proceedings further down the line, will press on and in meantime thanks again for all advice..Steve

David Mensah

15:28 PM, 1st February 2020
About 2 months ago

I think the covenant is there to prevent you from splitting the house into multiple independent dwellings. An HMO is normally a single dwelling. If you look up "dwelling house" you will see quite an extensive set of cases about what the name implies. A famous case is Roberts v Howlett (2002) - - but if actual fact the term is not well defined in the law, and the source of much confusion.

In m opinion this covenant does not stop you from using an HMO with shared facilities, and I would just go for it.

p.s.
See also http://www.fyldetaxaccountants.co.uk/property-articles/can-capital-allowances-claimed-hmo-definitive-answer/

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