Implied restrictive covenant breach on Ex LA student let in Norwich

by Readers Question

10:22 AM, 28th March 2016
About 3 years ago

Implied restrictive covenant breach on Ex LA student let in Norwich

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Implied restrictive covenant breach on Ex LA student let in Norwich

I am wondering if anyone else has come across this problem with Ex Council Houses.restrictions

I am purchasing additional ex Local Authority houses around the University in Norwich as going concerns which are let to students on single AST’s. My Conveyancer picked up on a restrictive covenant within the deeds and queried this through a law firm to the Norwich City Council.

The response received was:

The city council are of the view that occupation of ex-local authority properties such as these as student accommodation would in fact constitute a breach of the covenant which states:

a) That the owner shall not use the dwelling to carry on trade/business, and
b) That the owner shall use the property as a single private dwelling house only.

This decision follows a wider consideration of the question of student accommodation comprised in ex-council properties on the whole.

I have referred this back to the council as there is no trade/business carried on from the dwelling (it is let through a company not linked to the address) and that it is a group of 5 friends sharing a property on a single AST.

I am further aware that there are multiple student let purchases completing prior to 01 April 16 in ex Local Authority houses which do not appear to be getting the same response.

Has anyone on here had this issue previously with Norwich City Council or any other council, and if so, what was the outcome for you.

I am concerned about the ‘wider consideration of the question of student accommodation comprised in ex-council properties on the whole’ as there must be in excess of 1,000 XLA’s being used as student accommodation around the University and the potential knock on effect this could have.

This also has potential issues for further purchases or remortgages as most lenders will be wary of a declared implied breach.

Wayne



Comments

Neil Patterson

10:25 AM, 28th March 2016
About 3 years ago

Hi Wayne,
I have copied Dan Trivedi in as he has developed many student properties in Norwich and may have run across this before.

Wayne Hoban

10:49 AM, 28th March 2016
About 3 years ago

Hi Neil,

Thank you for your comment. I spoke to Dan on Wednesday when he popped in to work, he came across this once last year from all the properties that he purchased. It was another large Norwich investor that I spoke to who suggested that I post on here to see if there was anyone else who had come across this.

There is some interesting research and links on another thread that I have read on here and will look to try and pursue the matter down those channels.

Dan Trivedi

10:52 AM, 28th March 2016
About 3 years ago

Thanks for the tag Neil - Wayne has already contacted me about this issue. Although all ex LHA seem very similar depending on street and time of build covenants may vary. We've come up with this issue but with the NCC & a private trust who carrys the benefit of a similar covenant (can't say it's the same until I see it myself). without giving advise on specifics I don't know the detail of, all I can suggest is work closely with your solicitor about the exact tenant, AST & use Vs the specifics of the covenant. From my experience its normally a mis understood interpretation & can be resolved thanks

Harry Chunk

11:43 AM, 28th March 2016
About 3 years ago

If a breach of covenant has been breached for over 20 years then it can't be enforced. Very often you can take out an indemnity policy to cover against old and obscure covenants. Premiums are usually less than a couple of hundred pounds.

Wayne Hoban

11:50 AM, 28th March 2016
About 3 years ago

Thanks for the comment Dan. I would concur that it is is misinterpretation of the covenant and will be pursuing along those lines with my solicitor.

Wayne Hoban

11:52 AM, 28th March 2016
About 3 years ago

Reply to the comment left by "Harry Chunk" at "28/03/2016 - 11:43":

Hi Harry,

Neither of the properties have been student lets for over 20 years. Spoke to a solicitor about indemnity, but it would appear that I am unable to do this now as the council is aware of the implied breach.

Judith Wordsworth

20:07 PM, 28th March 2016
About 3 years ago

Would appear that renting to students could well be/ would be a breach of covenant as
a) That the owner shall not use the dwelling to carry on trade/business,

You are using the dwelling as a buy to let/rental business

b) That the owner shall use the property as a single private dwelling house only.

It's occupied by more than 1 family ie multiple unrelated to each other students

Jerry Stone

9:44 AM, 29th March 2016
About 3 years ago

At the end of the day Covenants are enforceable by way of an injunction.
It's a judgement are Norwich going to pursue an injunction to prevent you doing this?
I would think it highly unlikely.
It is an interesting area.
I had one council charge me a third of the value of a garden plot (14,500) to gain their permission to develop it but the adjacent council gave me the permission for free.

Hamish McBloggs

12:01 PM, 1st April 2016
About 3 years ago

Covenants are often odd and outdated and seem to me to reflect the state of the world both locally and generally at the time of their creation.

Our old family home near Heathrow (built late 1800's):

Can't turn it into a toll gate, place to sell beer or a brothel. But could operate as a solicitor or doctor. Didn't say anything about not letting it out (although the bank did) or running any other sort of business such as a butchers.

Our current family home (built 1984 ish):

No external aerials. Whereas the rather cute wychert cottages next door can and having been built before television and radio (or should I say, wireless) were invented unsurprisingly have no such covenant. Houses round the corner built after our home also have no such covenant either however, these later houses are not permitted keep a caravan.

Oh, and we have to cut the grass once (or is it twice?) a week with no allowance for prevailing weather conditions.

One of our BTL's (circa 1960) covenants states that a fruit tree must be kept. The area on which the house was built was mainly apple orchard so I understand why it's there. But now it's mainly new builds and gardens paved over to provide parking for the second family car, ne (neigh?) horseless carriage.

A friend of ours is not allowed to moor an airship.

I am aware that my perspective is narrow and uneducated in mysterious legal ways but I thought that covenants, amongst their objectives are an attempt to keep an area's 'character' and in part a mild form of social engineering (engender neighbourliness).

But some are fixed in the past with questionable relevance in a modern context and often inconsistent with those of an immediate neighbour. Is enforcement is unlikely? Perhaps with the exception of the brothel. Forcing someone cut their moderately well kept lawn would be the stuff of tabloid headlines and the friend can't afford an airship. Although I do remember an attempted purge on caravans in front gardens. People just moved them to their back gardens and some local officialdom was probably told to calm down as a compromise had been reached.

Having said that, it is probably prudent to ensure that one doesn't become liable for repairing the church roof.

I don't lose sleep over the fact that about 10 years ago the apple tree at our BTL gasped its last and fell over in cloud of fungus never to be replaced.

Surely it's better to 'fix' covenants rather than keeping fingers crossed hoping no one notices or taking out insurance policies or relying on blind-eye/tacit approval.

Is anyone in full compliance?
What are the mechanisms/costs for updating/removing covenants?
What is the view of BTL mortgage providers?

Hamish

(the apple tree's demise was carefully managed and no tenants were harmed during its planned removal. I've noticed it's snowing, so I'm off to cut the grass)

Adrian Bond

8:59 AM, 2nd April 2016
About 3 years ago

Hi op. I have also recently completed on a ex la house near the uea in Norwich and came across a similar covenant.

As I'm buying as a ltd company this concerned me a little so I asked my conveyances to clarify. Basically it says I shouldn't let the property as individual rooms just using a single ast (it will cover 5 people). The intention is single ast shared situation anyway.

How enforceable this would be I'm not sure as there are landlords operating in the area doing exactly that.

As mentioned earlier Dan Trivedi is our local expert so I have often asked him for advice.

Tbh I'm not concerned and will carry on as normal making sure I keep an eye on buisness and keeping away from beer hung a covenant set in the 70's!

Good luck

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