Compensation payable on modification of a covenant

Where, under section 84(1) (aa) of the Law of Property Act 1925, a covenant secures practical benefit to objectors, but they are not of substantial value or advantage, compensation may be appropriate. The Upper Tribunal (Lands Chamber) awarded compensation in Beeches Capital v Hunt and others [2024] UKUT 414 (LC). The case concerned Beeches Farm, on the outskirts of Tring. A November 1959 conveyance imposed on the land for the benefit of the vendor’s surrounding land, a covenant which prohibited the erection of any building or structure on the land other than those designed and to be used for agricultural purposes of no more than 7ft to the eaves and 12ft to the ridge. Agricultural use of the buildings had ceased in 1999, and one of two former hen rearing houses had been used for offices since 2016. The applicant wished to demolish the former agricultural buildings on the land and redevelop as a rural business and enterprise hub for which planning permission was granted in 2022. While the height of the new buildings would partly exceed the covenant height restrictions – as did the existing buildings – there would be an overall reduction in floor area of 32%. The owner of the adjoining land and, subsequently, her personal representatives, objected, arguing that the redevelopment scheme would not be a reasonable use of land in an agricultural area within a natural landscape. It would be visually intrusive, create light pollution and lead to intensification of business use. The applicant sought to discharge or modify the restriction to permit implementation of the redevelopment scheme. By the time of the hearing, it was agreed that implementing a conversion scheme using the existing buildings would not breach the restriction. The focus was on ground (aa). The objectors accepted that the redevelopment scheme was a reasonable use of the land, impeded by the restriction. A security fence currently mitigated the visibility of the buildings on site, but the restriction did not secure retention of the fence. Preventing any marginal difference between the levels of activity of the redevelopment and conversion schemes was not a practical benefit to the objectors but the constraint on the type of building on the site was, although not a substantial one. Modification of the covenant to permit a carefully specified scheme with the 17 conditions attached to the planning permission was a measured step which neither precluded nor set a precedent for future applications on land subject to the restriction. Compensation of £15,000 was appropriate for the loss of amenity the objectors would suffer until tree planting reached maturity. Louise Clark is a property law consultant and mediator