What is a restrictive covenant on a property and how can it affect you?
A restrictive covenant on a property is one of those legal issues that can sit quietly in a title document for decades — and then cause serious problems the moment a new owner tries to do something the covenant prohibits. At auction, where the purchase becomes legally binding the moment the hammer falls, discovering a covenant after the event can leave you stuck with a property that does not work for your intended use, with limited options and no way to undo the purchase.
Restrictive covenants are more common than many buyers realise, and auction properties carry them with particular frequency. Older properties, development plots, and former estate housing are especially likely to have covenants written into their titles — some dating back well over a century. Age does not make a covenant unenforceable. In many cases, an old covenant is every bit as legally binding today as it was when it was first imposed.
This guide explains what a restrictive covenant property means in practice, what the real risks are when buying at auction, and what your options are if a covenant stands in the way of your plans.
What is a restrictive covenant on a property?
A restrictive covenant is a legal obligation written into a property’s title that limits what the owner can do with the land or buildings. The covenant is attached to the land itself — not to any individual owner — which means it passes automatically to every future buyer. This is what lawyers mean when they say a covenant “runs with the land.”
Covenants are typically imposed by a seller or developer at the time a property is first sold or carved out of a larger estate. The original purpose was usually to protect the character or value of the surrounding land — preventing, for example, a house being built in a garden that would affect a neighbour’s view, or a residential property being converted to commercial use in a quiet street.
Common examples of what a restrictive covenant property may prohibit include:
- Building extensions, outbuildings, or any new structure on part of the land.
- Using the property for commercial purposes, including running a business or short-term letting such as Airbnb.
- Making structural alterations without the consent of a named party.
- Parking certain types of vehicles — such as caravans, motorhomes, or commercial vans — on the property.
- Keeping animals, running a trade, or creating a nuisance to neighbouring properties.
- Subdividing the property or erecting a second dwelling on the land.
The scope of what a covenant can restrict is broad. What matters is whether it is clearly written into the title, whether it is enforceable, and whether your intended use of the property would bring you into conflict with it.
Why are restrictive covenants particularly risky at auction?
In a standard private treaty sale, a buyer who discovers a restrictive covenant can raise enquiries, request further information, negotiate with the seller, and in some cases walk away if the issue cannot be resolved. At auction, none of those options exist after the hammer falls.
From the moment you win a lot at auction, you are legally committed to completing the purchase on the terms set out in the auction contract. If you later discover that a restrictive covenant prevents you from using the property as you intended — converting it, extending it, renting it out, or running a business from it — you are bound by that restriction regardless. There is no route back and no opportunity to renegotiate.
Auction legal packs do not always present covenant information clearly. Some packs contain a summary of title restrictions. Others include the Official Copy of the Register, which lists covenants under the proprietorship or charges sections but requires legal training to interpret correctly. Particularly with older properties, the full details of a covenant may be set out in a historic deed or transfer document that is referenced in the title but not included in the pack.
This is why having a solicitor review the legal pack thoroughly before auction day is essential. Our guide to what we check in an auction legal pack covers how we identify and assess restrictive covenants as part of our pre-auction title review.
What are the risks of a restrictive covenant on a property you buy at auction?
The consequences of buying a property with an undisclosed or overlooked restrictive covenant can be serious. The specific risk depends on the nature of the covenant and your plans for the property, but in general terms you could face:
Being unable to develop or alter the property
If you buy a property with the intention of extending it, converting it, or adding a structure to the land, a building restriction covenant will prevent you from doing so without either obtaining a discharge from the covenant or taking out indemnity insurance. Getting planning permission does not override a covenant. Many buyers are surprised to discover that even with full planning consent in place, a covenant can still block the development entirely.
Legal action from the covenant beneficiary
The person or entity with the benefit of the covenant — which might be a neighbouring landowner, a management company, or the descendants of the original seller — has the right to take legal action if you breach it. Depending on what you have done, the court can order you to undo the work at your own expense, pay financial compensation, or both. In serious cases, reinstatement costs can exceed the value of the work itself.
Reduced resale value and mortgage difficulties
A restrictive covenant that limits what can be done with a property will typically reduce its market value and make it harder to sell. Mortgage lenders carry out their own title investigations, and a covenant that conflicts with your intended use — or that affects the lender’s ability to sell the property if they need to repossess — may lead to the lender declining to provide finance, or requiring additional conditions before they will proceed.
Planning permission is not enough
This deserves emphasis because it catches buyers off guard repeatedly. Planning permission and restrictive covenants operate entirely separately from one another. The local planning authority does not check whether a proposed development would breach a private covenant when granting consent. Receiving planning permission gives you no protection against enforcement action by the covenant beneficiary. You need both planning permission and either compliance with or resolution of the covenant before you can safely proceed.
Is there a restrictive covenant in the auction legal pack?
A covenant can prevent you from extending, converting, or using a property as you planned — and planning permission won't override it. A specialist review tells you exactly what it means for your plans before you bid. Get your pack reviewed
How do you find out if a property has a restrictive covenant?
For registered properties, restrictive covenants are usually recorded in the title register at HM Land Registry. They appear under the proprietorship register or the charges register and are typically summarised there, with a reference to the original document that created them.
For unregistered properties, covenants may only appear in the original title deeds — which makes them harder to identify and assess, particularly if the deeds are incomplete. A property that has not changed hands for many decades may have covenants buried in documents that are difficult to trace.
The auction legal pack should, in principle, contain enough information to identify any material restrictive covenants on the title. In practice, this is not always the case. Some packs include only a brief summary. Others reproduce the title register without providing the underlying documents. A solicitor reviewing the pack needs to actively look for covenant references, assess what they mean in practice, and flag any gaps where further investigation is needed.
Can a restrictive covenant be removed or overcome?
In some circumstances, yes — but none of the available routes are quick, guaranteed, or without cost. The main options are:
Covenant indemnity insurance
Covenant indemnity insurance is the most commonly used solution where a restrictive covenant exists but is unlikely to be actively enforced. This type of policy provides financial protection against the cost of legal action, reinstatement, and any reduction in property value if the covenant is enforced in the future.
Indemnity insurance is typically available where the covenant is historic, where the original beneficiary cannot be identified or traced, or where there is no realistic prospect of enforcement given the circumstances. It is a one-off premium, paid at the time of purchase, and the policy runs with the property — meaning future buyers and mortgage lenders also benefit from it.
It is important to understand what covenant indemnity insurance does not do. It does not remove the covenant. It does not give you permission to breach it. It simply provides financial protection if enforcement action follows. If you intend to take a specific action that would breach the covenant — such as building an extension — you must not do so before obtaining the policy, as insurers will not cover a known, deliberate breach.
Application to the Upper Tribunal
Under Section 84 of the Law of Property Act 1925, a landowner can apply to the Upper Tribunal (Lands Chamber) to have a restrictive covenant modified or discharged entirely. This route is available where, for example, the covenant has become obsolete, where it provides no practical benefit to the person entitled to enforce it, or where its discharge would not injure that person.
However, this is not a quick or inexpensive process. Tribunal applications can take months or years, involve substantial legal fees, and are by no means guaranteed to succeed. It is rarely the right solution in the context of an auction purchase where timescales are tight. It may be worth considering as a longer-term strategy after completion if indemnity insurance is not available or appropriate.
Negotiating with the covenant beneficiary
Where the person or entity with the benefit of the covenant can be identified, it may be possible to negotiate a formal release or variation — essentially paying them to give up their right to enforce it. This can work well in some situations, particularly where the beneficiary is a neighbouring landowner who is open to negotiation. However, it requires identifying the beneficiary, obtaining their agreement, and going through a formal legal process to record the release. This takes time and is not always achievable before auction day.
What to do before bidding on a property with a restrictive covenant
If the legal pack or title register reveals a restrictive covenant, your solicitor should take the following steps before you bid:
- Identify the exact nature and scope of the covenant — what it prohibits, when it was imposed, and in whose favour it was created.
- Assess whether the covenant is likely to be enforceable in practice — including whether the beneficiary can be identified and whether they have any ongoing interest in enforcement.
- Consider whether your intended use of the property would bring you into conflict with the covenant, and how material that conflict is to your plans.
- Establish whether covenant indemnity insurance is available and, if so, at what cost — and factor this into your overall budget.
- Advise you clearly on the practical implications so you can make an informed decision about whether to bid, and at what level.
The due diligence window for auction properties is short. Getting legal advice on a covenant before the auction is the only way to bid with confidence. Our guide to what to do before bidding at auction sets out the full pre-auction checklist for buyers.
How Auction Solicitor identifies and advises on restrictive covenants
At Auction Solicitor, reviewing title restrictions — including restrictive covenants — is a core part of every auction pack review we carry out. We look beyond the summary in the legal pack to examine the underlying title documents, identify any covenant references, and assess what they mean in practical terms for your plans.
Where a covenant is present, we advise you clearly on its scope, the likelihood of enforcement, and the options available to you — including whether covenant indemnity insurance is appropriate, what it would cover, and what it would not. We will not tell you that a covenant is “fine” without explaining why. We will give you a clear, honest assessment so you can make a well-informed decision before the auction.
Our auction pack review service is available for properties across England and Wales. If you have found a lot with a restrictive covenant in the legal pack and you are not sure what it means for your plans, instruct us as early as possible — the sooner we review the title, the more time we have to give you proper advice before auction day.
HM Land Registry’s public guidance on how restrictive covenants are recorded on registered titles provides useful background on where covenants appear in a title register and how they are referenced in the deeds.
We assess covenants, advise on enforcement risk, and arrange indemnity cover.
Restrictive covenants require careful legal interpretation — not just acknowledgement that one exists. Our specialist solicitors identify every covenant in the title, assess whether it conflicts with your plans, advise on enforcement risk, and establish whether covenant indemnity insurance is appropriate — all before you bid.
