Can Restrictive Covenants Stop My House from Selling?

Selling a house can be a complicated process at the best of times. From buyers haggling over the price to questioning the details of the survey, it can be stressful. Sometimes, however, things out of your hands can also make the sale a little more complicated and even stop it from happening altogether.

Restrictive covenants are one such example. Due to the varied nature of restrictive covenants, they could stop your house from selling. If buyers find that there are covenants in place, they might be reluctant to make you an offer or may think they can offer you much less than your asking price.

What is a restrictive covenant?

This might be the first time you’ve encountered the term, but have no fear, we’ll guide you through. A restrictive covenant is a condition written into the property deeds that explains what a homeowner can and cannot do with their property. For some people, it won’t ever be an issue, but for some buyers, it can be a huge concern.

There is a wide range of restrictive covenants that could be in place, but most commonly, they include:

• The buyer cannot alter the building by changing its use or adding an extension.
• Prevention of the land being used for business purposes.
• Prevention of other buildings or structures being built on the land.

I own the house! Why is a restrictive covenant in place?

Developers often put restrictive covenants in place to ensure that, regardless of your position as a freeholder or leaseholder, you maintain specific property standards in the neighbourhood. For example, a significant change to your home could vastly alter the overall appearance of the neighbourhood, and this could prove detrimental to all who live there – especially if they then struggle to sell their homes. As a result, restrictive covenants are in place to ensure everyone follows the same rules.

Perhaps interestingly, covenants can even extend to the aesthetics of your home and not just structural alterations. This means that in some cases, there will be rules over the condition of your garden, whether satellite dishes are allowed on the front of your house, and even where vehicles are parked.

Remember, though, if these covenants apply to you, they also apply to others within the property development as well. This means you won’t have to worry about others inadvertently driving your property value down with their structural or cosmetic alterations.

Will a restrictive covenant expire?

You could say this is a bit of a grey area, and it would be unwise to assume that your restrictive covenant has expired and that you can sell without concern.

Restrictive covenants can be considered unenforceable, but it is always worth checking first. Covenants can be seen as unenforceable if they are very old and:

• The original landowner or builder cannot be traced.
• The covenant is now seen as obsolete.
• The terminology or purpose of the covenant is unclear and cannot be applied.

If any of the above apply, it not only means you could develop your property without concern about a covenant stopping it, but you might also find it easier to sell.

Why can a restrictive covenant make it harder to sell my home?

For some people, a restrictive covenant won’t make any difference to the sale, especially if the buyer is a cash house buyer. With no need for a mortgage, no lender needs to be satisfied with the future sale prospects of the home.

Development restrictions: For others, though, restrictive covenants can make it hard to sell a home. When someone wants to buy a home, they often have grand plans for future development and changes. If they are forbidden from doing this, they may not see your home as the one to purchase.

Mortgage concerns: There are also concerns over the mortgage. As mentioned earlier, lenders might be reluctant to lend to a buyer. If they know a future sale may be difficult and make it harder for them to get their money back, they might be unwilling to lend.

Burden of responsibility: A restrictive covenant doesn’t move with the seller; it stays with the property for good. Some buyers may feel this is too much responsibility to bear, especially if they learn that a breach could result in penalties.

What happens if a restrictive covenant is breached and I want to sell?
It depends. The penalties vary depending on which covenant has been breached. For example, if you have built an extension and then find out it is forbidden, you might have to pull it down. This will not only take time and delay the sale even further, but it will also cost an awful lot to rectify. In addition, you could see fines issued too.

Some breaches are seen as minor. If, for example, you’ve put up a satellite dish and it is not allowed on the front of the house, it may be possible to move it and resolve the issue.

Occasionally, covenants are breached in error and only become apparent to you when you sell. If this is the case, you must rectify it before selling the home. Luckily, there are insurance policies in place that can help here. If there have been no challenges to the breach and it occurred more than 12 months ago, insurance may protect the completed work, meaning you don’t have to make any alterations. This policy then passes on to future owners, protecting them from future claims.

Can I remove a restrictive covenant to help me sell my house?

This could be tricky. It is certainly possible, but there is no guarantee it will go in your favour. Firstly, you’d have to find out exactly what the covenant covers and then determine whether it is unreasonable.

If you think it is, you can apply to the Land Chamber of the Upper Tribunal to either have it altered or removed. It is not a cheap process and isn’t quick either. Should the covenant deliver benefits to those who put it in place, you might even be ordered to pay them compensation.

Restrictive covenants can slow down a house sale significantly. Lenders may be unwilling to support buyers, buyers may be unsure about the risks, and they may also worry about any potential penalties that could be incurred. As a result, selling to a specialist company like Sell House Fast might be the best option. We buy any house, regardless of location, covenants, or condition. We simply make an offer, and if you accept it, we buy your home. This can happen in as little as seven days, but we tailor the process around you. So, if you need longer, just let us know. Start the process today and sell your home for cash.