In Housing Solutions v Smith [2023] UKUT 25 (LC), the Upper Tribunal (Lands Chamber) has modified restrictive covenants under section 84 of the Law of Property Act 1925 to enable affordable housing to stand.
The affordable housing in question had been built as part of a wider development on land burdened by restrictive covenants. The owners of the land benefitting from the covenants were a children's hospice next to the site, and Mr Smith, who had inherited a large amount of the farmland nearby.
The Supreme Court had ruled in previous litigation in 2020 that the covenants should not be modified because the original developer, Millgate, had built before having the covenants discharged. This left matters in limbo, and so a deal was struck with the children's hospice, but that did not involve Mr Smith. Housing Solutions therefore applied to the Upper Tribunal to modify the covenant on alternative grounds, namely that that the covenant would 'impede some reasonable user of the land for public or private purposes' and that it 'did not secure … any practical benefits of substantial value or advantage' to the person objecting.
The earlier decision had already found that the covenants did not secure any real benefit to Mr Smith. In this second case the Upper Tribunal visited the site and agreed. The 'egregious' behaviour of Millgate, which was what had lost the Supreme Court case, was not relevant in Mr Smith's case. As between Housing Solutions and Mr Smith, the balance fell towards the reasonable use of the land and against a person who did not derive any substantial benefit.
Having dismissed various arguments that Mr Smith brought regarding the application, the Upper Tribunal held that the covenants ought to be modified to allow the affordable housing.
The modification of restrictive covenants is not ordered lightly by the Upper Tribunal and the judgment is interesting for its careful evaluation of what constitutes a 'benefit' from a restrictive covenant. The Hospice clearly benefited from the privacy of their grounds and the views available to children walking or being wheeled around the edges of the land. Mr Smith did not derive 'any practical advantage … in the covenant preventing him from seeing houses from his cabbage field'.
Guy Willetts and Charlotte Doughty of Trowers & Hamlins LLP acted for Housing Solutions in this case.
