Since the passing of the Leasehold Reform Act 1967, tenants under long-term tenancies have been allowed, in normal circumstances, to buy the freehold of the property they rent.
One of the problems with land is that the title is frequently burdened by covenants, which operate to restrict the rights of the owner of the land – typically by imposing limitations on development or prohibiting certain types of use of the land. Such covenants normally pass from owner to owner. The presence of a covenant can affect the value of a property considerably.
The Lands Tribunal recently considered whether such covenants had to be included when a property was bought by a tenant. In this case the tenant and the landlord lived in adjacent houses and the tenant wished to acquire the freehold reversion of the house in which he lived. The lease contained a covenant that any new building or extension built on the existing building required the landlord’s consent, which could not be unreasonably withheld. There were similar covenants attaching to a number of properties in the area. The landlord had previously refused consent for an extension proposed by the tenant and at the Valuation Tribunal, the tenant was successful in obtaining a ruling that the covenant should be excluded when the property was conveyed to him. The landlord appealed to the Lands Tribunal.
The landlord’s argument was that the covenant should be included in the conveyance because it was reasonable and protected the amenity value of the landlord’s property (and other local properties) by helping to ensure that any development of the property was appropriate. There was nothing inherently unfair in retaining the covenant attaching to the land. The Lands Tribunal agreed.