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

15:59 PM, 1st February 2020
About 2 months ago

Reply to the comment left by David Mensah at 01/02/2020 - 15:28
Thank you very much David, the info on the HMRC definition resulting from the case law is really clear - and helpful to my situation- will be interesting to see what the other as yet unknown RS are about, in meantime much appreciate your help! Steve

Ian Narbeth

10:44 AM, 3rd February 2020
About 2 months ago

Reply to the comment left by F1_Fan at 01/02/2020 - 11:13"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." WRONG, WRONG, WRONG.
The benefit of restrictive covenants must be annexed to land (the dominant tenement) and subject to certain conditions, the covenant can be enforced by successors in title to all or part of the dominant tenement against the original covenantor (the owner of the burdened land) and that person's successors in title. So if the person who put it on the title sells off his land in parts, each buyer may be able to enforce.
Insurance may provide comfort but it does not prevent the covenant being enforced. The insured also needs to check the policy terms as usually the most the insurers will pay out is a sum equal to the diminution in value caused by the covenant. In this case that might mean the difference between the market value of the property without the burden of the covenant and its value with the burden. If the dominant owner has a strong case insurers may take the easy line and pay out this sum o the insured rather than fight an expensive case.

Steve FLS

11:44 AM, 3rd February 2020
About 2 months ago

Reply to the comment left by Ian Narbeth at 03/02/2020 - 10:44
Thanks very much for this Ian, I've sent for fuller info re next door neighbours title / RC from the Land Registry, am thinking once received I could scan and ask you to look into this for me please ? Would this be best arranged by my contacting you via DMH ? am much obliged Steve

Ian Narbeth

12:59 PM, 3rd February 2020
About 2 months ago

Reply to the comment left by Steve FLS at 03/02/2020 - 11:44
Hi Steve
Yes, please contact me. Google my name for contact info.

Steve FLS

15:47 PM, 3rd March 2020
About a month ago

Reply to the comment left by Ian Narbeth at 03/02/2020 - 12:59
Hi Ian, thank you for your advice when we spoke on the telephone, I now have the relevant into which I've had scanned and sent across to you, other than this issue all is looking good, will look forward to hearing from you, kind Regards Steve

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