HMO – single private dwellinghouse covenant refusal?

HMO – single private dwellinghouse covenant refusal?

10:58 AM, 3rd March 2021, About 2 years ago 13

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I’m selling a house set up as an HMO, that hasn’t been rented out to anyone. It has a ‘single private dwelling house’ restrictive covenant. We are/were ready to exchange & complete.

The buyer has had the HMO licence guaranteed by the council 14 days post-completion, and it was a term of his mortgage that covenant consent should be provided by the council prior to exchange. So he wrote to the council and requested approval.

Their response was ‘I wish to confirm that the Housing Department will not release the covenant in order to use the above property as an HMO’.

I believe the council do not necessarily act against HMO’s breaching covenants in the area, although I’m well aware this isn’t a guarantee they won’t, but without consent, I don’t see how the buyer’s mortgage provider will release funds.

This is now my problem because he can walk away, and I will struggle to sell the house to anyone other than a cash buyer willing to take the risk.

Does anyone have any possible solutions? Other than selling it to someone else as a family home?

Very grateful for any assistance you can provide.


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Ian Narbeth

10:29 AM, 8th March 2021, About 2 years ago

Reply to the comment left by Rob Crawford at 06/03/2021 - 09:39Hi Rob
The words need to be read in context which means looking at the whole document. The same words might have different meanings in different documents. To give you an example. A lease is for a term of 5 years from 8th March 2021. Does that mean it ends on 7th March 2026 or 8th March 2026?
It may surprise readers to learn that when dealing with dates the default position in English law is that "from" means "from but excluding" so, in my example the term would actually begin on 9th March 2021 and end on 8th March 2026.
Single private dwelling house might mean in the occupation of one household (thereby excluding HMO use) or it might be contrasted with subdivision into flats or use as, say, a chiropractor's office which can readily be carried on in a house. It all depends.
The reasons for inserting the words are not relevant. What matters is what words are used. The test is "What do the words the parties have used mean?" not "What did the parties mean to say?" or "Why did they say it?"
I have had numerous in my career cases where a covenant was found to be unenforceable. In cases where it is uncertain, getting insurance is a comparatively inexpensive option but it is vital not to contact the people who may have the benefit of the covenant.


7:39 AM, 13th July 2021, About 2 years ago

Reply to the comment left by Ian Narbeth at 08/03/2021 - 10:29
May I ask why “ it is vital NOT to contact the people who may have the benefit of the covenant?”

Ian Narbeth

10:49 AM, 13th July 2021, About 2 years ago

Reply to the comment left by HNN2210 at 13/07/2021 - 07:39
HNN2210, may I call you HNN?
The reason it is vital is that you may wish to take out indemnity insurance and if you have approached the people who might bring a claim, you have potentially stirred up a problem.

Insurers' approach is "Let sleeping dogs lie." If you alert the neighbours then you increase risk of a claim. Given the low premiums (typically 0.1 to 0.2% of the sum insured) insurers don't want to increase the risk of a claim. If you do approach a particular neighbour insurers may refuse to offer cover at all or may exclude claims from the neighbour concerned or their successors in title.

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