Restrictive covenants to buy or not to buy

Philomena78

So we finally found a house with a garden priced at 650k which is at the top of its value according to our homebuyer survey. We negotiated the price down to 640 after survey. It has a nice garden but the house itself needs a 100k spent on it. We were about to exchange when we noticed these 2 covenants: 
1) That no more than one dwelling house with the usual offices and outbuildings shall be erected on the property hereby conveyed

2) No dwelling house office outbuilding or other erection shall be placed on the property hereby conveyed without the plans therefore having been first been approved by the vendor or the owners for the time being of xxx(address of neighbour) aforesaid.

Our solicitor did not see the covenants as representing any serious issue and did not inform our lenders about them. She sent us the exchange documents and went on holiday for 2 weeks.

We are struggling with the decision. The house is already at the top of what we can afford and we are putting everything we have in it in addition to a huge mortgage from LBS. 

We wanted to buy the house because of its potential. The plan was to renovate over few years. We are now worried that this might be a risky investment particularly if we had to sell in a couple of years. 

What would you do? Are these covenants serious or is our solicitor right in suggesting to ignore these.  Do they have implications for us in terms of resale value? What should we ask the sellers to do? 

user1977

Why do you think the covenants are a problem? Have you actually discussed them with your solicitor?

Philomena78

@user1977 we are not sure if they are a problem as we have no experience of this. Our main concern is whether they affect potential resale and value. The solicitor did not think these were an issue, certainly not for the lender. She did not phone us to discuss these and just left us the exchange documents before she went on holidays.

Slinky

How old are these covenants? Are these new ones being added by the current owner to protect him and his neighbour? We pulled out of a purchase where the vendor was moving to a house he had had built next door and was trying to create covenants about him having access and ownership of a passage next to our garage. I dare say we could have got these removed but decided we didn't want to live next door to him.

Philomena78

@Slinky they were set up by the previous owner of the neighbouring property in 1982. The current neighbour is aware of them and does not want these removed. He said he is happy for us to have a shed or a trampoline in our garden or whatever “within reasons”

badger09

Philomena78 said:

@Slinky they were set up by the previous owner of the neighbouring property in 1982. The current neighbour is aware of them and does not want these removed. He said he is happy for us to have a shed or a trampoline in our garden or whatever “within reasons”

I wouldn’t be concerned about 1) unless you had planned to build another house in the garden & had offered in that basis. 

2) Could be an issue for you or subsequent purchasers. This sort of covenant is often seen on new build estates, where the developer doesn’t want people erecting a mishmash of sheds, garden rooms etc which could spoil the look of the estate. 

If the covenants were created by the previous owner of your neighbour’s house, the right to enforce them may not have passed on to your neighbour. Instead that right might still be with the previous owner or have been passed on to their heirs. In which case, your current neighbour will have no say on whether you can erect a shed, trampoline etc.

I don’t think your solicitor should have ignored this. If you want to build a shed, you will either have to get permission from the relevant person, or go ahead & build it & hope they don’t exercise their right & make you take it down again. 

A third option is the often touted ‘Indemnity policy’ which is seen largely as a money making exercise for everyone involved, apart from the person paying. 

johnhenstock

Standard stuff, nothing concerning there.

fackers_2

badger09 said:

Philomena78 said:

@Slinky they were set up by the previous owner of the neighbouring property in 1982. The current neighbour is aware of them and does not want these removed. He said he is happy for us to have a shed or a trampoline in our garden or whatever “within reasons”

I wouldn’t be concerned about 1) unless you had planned to build another house in the garden & had offered in that basis. 

2) Could be an issue for you or subsequent purchasers. This sort of covenant is often seen on new build estates, where the developer doesn’t want people erecting a mishmash of sheds, garden rooms etc which could spoil the look of the estate. 

If the covenants were created by the previous owner of your neighbour’s house, the right to enforce them may not have passed on to your neighbour. Instead that right might still be with the previous owner or have been passed on to their heirs. In which case, your current neighbour will have no say on whether you can erect a shed, trampoline etc.

What they/he/she said.  ^^^

House we’ve just completed on had 12 covenants from the 80’s mainly by the house building company… One of which I found amusing was that no caravans, motorhomes or speedboats are permitted on anyone’s drive or on the estate! Sure way of keeping one type of person from the estate. Another is that if you remove a shrub or tree, you must replace it somewhere else within your property with similar. It’s a lovely area and they are only trying to keep the estate to an appealing standard. 

I’ve been to some estates and it’s been quite the free for all on random looking extensions and out buildings… dare I say it, what was a lovely new build site (is there such a thing?) turned into something resembling a gypsy camp!

Philomena78

Unfortunately, the covenants pass with the lands not owners and the next door neighbour is not interested in releasing/ removing these. The house is built on the land that was owner by the neighbour and the covenants are there to ensure that this neighbour continue to have uninterrupted views to a beauty spot. Previous enforcement of the covenants meant that the extension on the house we are buying is built as a flat roof etc. I had a conversation with my surveyor saying that these covenants affect the value of the property by 5%. I am not sure what to do and whether it is worth renegotiating or simply say sorry we pass. This is an extremely désirable areas where detached houses with a garden don’t come to the market so often 
 

MultiFuelBurner

So the comments

Surveyor says these covenants affect the valu of property by 5% versus this is an "extremely" desirable area where detached houses with a garden don't come to market often.

Only you can weigh these two points above and no amount of stranger internet discussion can weigh up the pros and cons.

mrpsmith

One of which I found amusing was that no caravans, motorhomes or speedboats are permitted on anyone’s drive or on the estate! Sure way of keeping one type of person from the estate. 

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