How do I overcome a restrictive covenant issue?

[Dymphna]

Hello,
I am a newbie and pulling out my hair over a restrictive covenant in our deeds.

I'd like to convert a spare room to use for my beauty treatments but am worried about a restrictive covenant that states "no trade or business of any kind shall be carried on upon any part thereof without previous consent in writing from the Vendor".
The covenant goes back to 1921 but I understand it is enforceable under the Land Registration Act 1925.

I Googled restrictive covenants and took up an offer of free telephone consultation and was given free advice by a solicitor to take out an indemnity insurance as protection should a neighbour want to enforce the covenant, and that "in most cases it boils down to money and the insurance company will settle to allow you to continue running the business" He suggested using him or going locally just to get the insurance papers checked, putting no pressure on me and saying it should cost no more than £200 each for insurance and solicitor.

However, I have read conflicting views regarding this, stating that insurance would be a waste of money as it would give no protection.
Can anyone help me please?
Many thanks,
Lin

 

[Lynne Baker]

Could you try asking the Land Registry for guidance?

 

[Dymphna]

Thank you, Calla.
I have just phoned Land Registry, who don't police Restrictive Covenants but they did verify that it is enforeceable. The lady I spoke to was very helpful and reiterated the solicitor's comments:
1.Regarding the neighbour's attitude regarding the likelihood of them complaining - It would cost them money to do so.
2. Insurance would be a buffer against any money put into or any loans made for the business.

I don't know if you remember, but we met at the Business Link course in Basingstoke at the end of Feb- you gave me some pointers for training!
Regards, Lin

 

[Sheer Beauty]

Hi Lin,

I am in australia and we have slightly different rules regarding setting up a home salon but maybe i can help you based on my understanding.
I am gathering from your post you are renting at the moment? can you ask your landlord regarding it?

Sometimes the restrictive covennent affects you only if you advertise your business outside your premise which is worthwhile to check that out as you will need some form of advertising and if you cannot you may find it hard to get business.

Helen

 

[Ruth Mills]

No, in the UK, a restrictive covenant can apply to a property that you own too.

About 5 years ago, that caused a house purchase to fall through for us, because when we got the deeds to the new property, it said that no pets were allowed - not good when you and your partner have 4 cats between you at the time and are wanting to get a dog!!!

However, a lot of the time, you see people break restrictive covenants though, and nobody seems to give a damn, e.g. just recently a neighbour erected a fence that's visibly greater than the 4 ft 6 ins height specified in the restrictive covenant for our estate, but I don't see anyone shopping them to the house building company who built our estate way back in the early 1970s!

 

[persianista]

There can be ways round restrictive cvenants on property. Your solicitor should trace who is now the holder of the covenant. they can issue a deed of variation.
The covenant as it stands now is enforceable and breach of it can result in being persued for damages. These covenants are taken seriously by the courts as they provide peace of mind for all of you living in an area that you wont be bothered by commercial premesis opening, which would affect the prices of local properties.
I have restrictive covenants on my house and I think its great that I will never have anyone with a fleet of vans operating out of their garage, nobody can ever build anything but "detached houses of good quality in keeping" and that gardens cant be sold and cut up to squeeze in a few more houses.

 

[Dymphna]

My solicitor has advised me not to worry about the covenant; indemnity insurance would not be useful as it only covers possible breaches.
Also a neighbour has been running a business from home long before we moved in (1997) and they have the same restrictive covenant in their deeds.

 

[Ruth Mills]

My solicitor has advised me not to worry about the covenant; indemnity insurance would not be useful as it only covers possible breaches.
Also a neighbour has been running a business from home long before we moved in (1997) and they have the same restrictive covenant in their deeds.

Yep, I guess they're only likely to be enforced if someone complains because the person in breach is causing a nuisance (e.g. operating a car repair business from their garage and making lots of noise and smells, and having lots of cars parked outside). Nobody would really give a damn if someone was running a business selling stuff on eBay from their house, for example... unless they were really causing a nuisance!
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