Obstacles to commercial development: easements and restrictive covenants
Insight
Planning permission has been granted, contractors are ready, the ground is primed for transformation. The painstakingly planned development is finally ready to begin – until ancient easements and long-forgotten covenants benefitting neighbouring land emerge, threatening to slow progress.
For property developers, few things are more frustrating than discovering that your plans are blocked by a decades-old legal right or restriction buried within the title deeds and in favour of a neighbour. Easements and restrictive covenants are among the most common – and often overlooked – obstacles to development projects.
What are easements and restrictive covenants?
Easements are rights enjoyed by a party over another person's land for the benefit of theirs. These might include rights of way, rights to light, or rights to access utilities. Restrictive covenants, meanwhile, are limitations placed on how land can be used. They are often found in transfers of land or leases and examples include prohibitions on building above a certain height, operating a business or type of business, or even parking commercial vehicles.
These rights and restrictions can have a significant impact on development. A right of way might prevent construction across a key part of the site. A covenant against commercial use could render a retail or hospitality scheme unviable. Even a seemingly minor restriction can have major financial implications.
What can we do about them?
Fortunately, there are ways to potentially address these issues. In some cases, the beneficiary of the easement or covenant may be open to negotiation. Agreements to vary or release a restriction can often be reached, typically involving compensation. The key to this approach is identifying problems early and making contact with all beneficiaries to start negotiations.
Indemnity insurance is also an option to mitigate (but not eliminate) such risks. Careful consideration should be given before approaching beneficiaries of easements and covenants as this could render the risk uninsurable or invalidate an existing policy.
Where negotiation on covenants is not possible, developers may consider applying to the Upper Tribunal (Lands Chamber) under section 84 of the Law of Property Act 1925. This provision allows for the modification or discharge of restrictive covenants in certain circumstances. The Tribunal may exercise a discretion to grant relief on grounds including where the covenant is obsolete, if it unreasonably impedes the land’s use, or if the beneficiary would not suffer substantial injury.
Case law examples
A notable example is Derreb Ltd v Blackheath Cator Estate Residents Ltd [2017] UKUT 209 (LC), where the developer sought to build a mixed use housing scheme on land subject to a 1956 covenant limiting use to detached houses for use as private residences only or a sports ground. Although the part of the covenant which limited use to a sports ground was deemed obsolete, the Tribunal preserved restrictions near neighbouring properties to maintain the estate’s character, while modifying others to allow development of the land. It was considered unsatisfactory for that land to remain derelict and undeveloped. This case highlights the Tribunal’s nuanced approach and the importance of tailoring applications carefully.
Another instructive case is Fosse Urban Projects Ltd v Whyte and Others [2024], where a developer built a house in breach of a covenant restricting use to garden land. Despite satisfying the legal grounds for discharge, the Tribunal refused to exercise its discretion to discharge or modify the covenant due to the developer’s 'build first, apply later' approach in circumstances where it was aware of the restriction and knew that it was enforceable, viewing this as cynical and unjustified. This underscores the importance of addressing covenants proactively and transparently.
Other key points
It is important to note that planning permission does not override private rights. A local authority may approve a development, but that does not extinguish an easement or covenant. However, planning permission can support an application under section 84, as it demonstrates that the proposed use is reasonable and in the public interest.
In some cases, particularly where a development forms part of a wider regeneration scheme, compulsory purchase powers may be available. These powers can override private rights, but they are subject to strict statutory controls and are typically exercised by public bodies rather than private developers.
Summary
Easements and restrictive covenants in favour of or otherwise affecting neighbouring land are not necessarily fatal to a development, but they do require early and careful attention. Identifying and addressing these issues at the outset can prevent costly delays and legal disputes down the line.
Neighbour and boundary issues: key legal considerations for landowners and developers
Neighbour-related property issues continue to present practical and legal challenges for landowners, developers and homeowners. Our Property Litigation team has produced a series of short articles examining some of the most common areas of dispute, the principles that govern them and the steps that can reduce risk.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, November 2025
