Excessive Charge to Approve Restrictive Covenant

Allley

Hello All, Apologies in advance for the excessive length but I have attempted to add full details.

We are hoping that any solicitors could provide some guidance and how we should act in the following matter.

We have a restrictive covenant on our property. The benefit is a land owner who has owned, and still owns, a fair amount of land in the village. We followed the correct procedure by contacting the land owner asking for approval.

It has taken over 4 months for them to respond (even after us pushing for one), through a third party, with a letter stating they would approve the plans subject to a fee. The fee they have considered reasonable and standard for this type of approval is 10% of the increase in value to the property based on the alterations made. They claim recent agreements have been settled on this basis.

We clearly find this monstrously inappropriate for a number of reasons:

- how do you quantify on a percentage basis
- how do you differentiate the increase based on external alterations vs internal alterations
- The extension is planned as 2 storey of about 18 SQ m per floor and likely to cost us in excess of £50k. As such we can only estimate the increase as the same. It will add a bigger open plan kitchen diner and a larger master bedroom suite. This would mean anywhere in the region of £5000 to look at plans and see they are not going to cause any issues.
- additionally they kindly suggested we appoint a valuer to set the increase and that they can suggest a number of valuers to pick from! How convenient for us!

We have contacted the previous owners who have informed us that the two approvals they gained for an extension and a conservatory (about 20yrs ago) did not cost them anything and another property in the village were only charged a nominal £300 to approve a conservatory from the same land owner recently.

We have responded to them stating how unreasonable we feel this is, but again it has taken a further 2 weeks with no response and are concerned they are deliberately delaying proceedings to their advantage in respect to us wishing to get on with the work.

We are hoping to get some guidance on what should be considered as a reasonable charge in this matter as we feel that we are being taken advantage of and "held to ransom" . Even an administrative charge of £300 seems excessive to the normal residential person but we feel this is even way beyond what they would agree to.

We also feel that ignoring and hoping they do not persue is not much of an option as they are well aware of the situation now and high chance they would go through legal proceedings.

Many thanks in advance!!!

G_M

In answer to the various "how do you quantify..." questions, the answer is you get an RICS valuer (you can choose one yourself) to value the property with, and without, the extension.

Clawback or Overage covenants are not unusual. What is the exact wording of your covenant?

https://www.lawontheweb.co.uk/personal/clawback-and-overage-agreements

MobileSaver

Allley wrote: »

We have a restrictive covenant on our property. !

As G_M says, what exactly does the restrictive covenant say?

Davesnave

As above, without knowing the wording of the covenant, there is no way anyone can advise you.

However, a conservatory is a 'temporary structure' and doesn't usually increase the value of a property in the manner that a conventionally built extension would.

Allley

The covenant was drawn up when part of the land was sold off to a third party to build the house originally and states : '...Not to erect or cause to be erected any building structure fence gate or wall whether of a permanent or temporary nature whatsoever except a dwelling house thereto strictly in accordance with the plans specifications construction materials details and elevations approved in writing by the vendor or his successors in title Provided that the prior written approval of the Vendor or his successors in title shall be obtained to any variation of such plans for such dwelling house and as to the construction materials and external finishes thereof and the Purchaser and his successors in title shall not subsequently construct alter or change the external structure finishes elevation or appearance in any manner of the said dwelling house or any any future building or structure without the prior written approval of the Vendor or his successors in title.'

The retained land to benefit is touching our property on the western edge but the house is set back and we do not see how our extension would have any devaluation to the retained land as we are only building over the existing conservatory. So this is merely a case of them needing to ensure that we aren't grossly oversizing or altering the design of the property - we are stipulating using the same building materials and want the extension to look like it was always there.

Allley

Thanks for the previous comments.

From the wording of the link this covenant is not an overage or clawback agreement as there is no mention of financial gain - it is merely intended to ensure we do not do anything to damage the looks of the house for neighbouring land.

My original comment regarding quantifying the gain was not aimed at the logistics, but at the questionable validity of the concept due to the blurred lines between what is value gained by the external change and that gained from all the "extras" that we would be doing as part of the finishing. I.e. we add 20m2 to the floor area of a bedroom to make a larger room. This alone may add a small amount to the value, but if we start adding extra details such as vaulted ceiling, partition up into a bedroom, ensuite and dressing area this could potentially add extra value to the property. This therefore makes a "value-added" basis for the fee inappropriate as this internal work has only an in-direct relevance to the covenant.

Another example of the inappropriate nature - should we appoint an RICS valuer directly after the structural work has been completed with a bare shell everything exposed and ask the value to be taken then with the back of the house bare and ripped apart - no kitchen, no plastering etc? To me that would be as appropriate as the benefit of the covenant asking to have 10% of the value after we have done all the internal work.

From my understanding the fee for this sort of things needs to be 'reasonable'. I would consider this a charge to cover administrative activities, so to review the plans and make a judgement this should be limited to a nominal few hundred pounds to cover a couple of hours of someone's time.

Any comments?

anselld

You may be right but the only way to prove it is to challenge the Covenant at the Land Tribunal. That would probably prove more expensive than the proposed 10%.

So it comes down to negotiation. You think it is a simple admin fee, they think it is valuation based. Can you reach a compromise? If not it will be time and money consuming.