Restrictive Covenants on Rental Property 2026 — Complete Landlord Guide

How restrictive covenants bind future owners — the key rules

A restrictive covenant binds successors in title (future purchasers) of the burdened land if four conditions are met:

• Condition 1 — negative in substance: The covenant must be restrictive (negative) in nature — it must restrict what the covenantor can do with the land. A covenant not to use land for commercial purposes is negative (it restricts use). A covenant to maintain a fence or contribute to road costs is positive (it requires action) — positive covenants do NOT run with freehold land and only bind the original covenantor (not future buyers). This is a fundamental principle of English land law (established in Haywood v Brunswick Permanent Benefit Building Society [1881] and Rhone v Stephens [1994]). In practice, developers try to circumvent the rule against positive covenants running with freehold land by using chains of indemnity covenants (each buyer covenants to observe the obligations and indemnify the seller), or by registration of a restriction requiring each buyer to enter into a deed of covenant on purchase
• Condition 2 — intent to bind successors: The deed creating the covenant must show that the covenantor and covenantee intended the covenant to bind successors in title. Modern conveyancing deeds typically include express wording to this effect (e.g., 'the burden of this covenant runs with and attaches to the land'). Older deeds may require interpretation
• Condition 3 — covenantee retains benefited land: The person who has the benefit of the covenant must retain land that benefits from the restriction — the covenant must protect adjacent or nearby property. A restrictive covenant cannot exist 'in gross' (without benefited land). If the original beneficiary has sold all their land, the benefit of the covenant may have passed to their successors (if it was intended to pass with the benefited land and the successive owners remain)
• Condition 4 — registered land notice: For registered land (which covers virtually all UK property), a restrictive covenant must be protected by registration on the Land Registry title to bind a purchaser for value. The covenant is noted on the Charges Register of the burdened title. If a restrictive covenant is not noted on the title, it may not bind a buyer who has no notice of it. However, most significant restrictive covenants imposed in post-1925 conveyances are properly registered. Check the Charges Register carefully before exchanging contracts

Common restrictive covenants affecting BTL landlords

These are the covenants most likely to affect buy-to-let investment and use:

• No commercial or business use: A covenant 'not to use the property for any commercial, trade or business purpose' is among the most common in residential freehold and leasehold titles. Does renting out the property breach such a covenant? The generally accepted position (supported by case law) is that renting a property as residential accommodation does NOT breach a no-business-use covenant — the occupying tenant uses the property as a home, not for commercial purposes. The fact that the landlord derives income from the property as a business investment does not make the property's use commercial. However, operating a property as an HMO where the landlord also resides on the premises and provides services (de facto a lodging house or hotel operation) is more likely to be characterised as a commercial use — take specialist legal advice
• No HMO or conversion to multiple occupation: New-build residential estates sold from the 2000s onwards frequently include covenants explicitly prohibiting: (a) use as an HMO or house of multiple occupation; (b) conversion to flats or multiple units; (c) use by more than one household. These covenants are created by developers specifically to maintain the residential character of estates and are enforceable by the management company or neighbouring plot owners who retain the benefit. A landlord who converts a new-build house to an HMO in breach of this type of covenant risks injunction proceedings from the estate management company. Check the estate documentation (deed of covenant; transfer deed; standard conditions) carefully before attempting an HMO conversion on a new-build estate
• No alterations without consent: Covenants requiring consent before carrying out alterations (extensions; loft conversions; annexes; erecting fences above a certain height; changing window styles) can restrict landlords who want to improve or convert properties. The consent must be obtained from the person with the benefit of the covenant — usually the original developer's management company (in a modern estate) or a neighbouring property owner (for older covenants). If the relevant party no longer exists (the developer has dissolved; the benefited land has been sold with no mechanism for the benefit to pass), the covenant may be unenforceable in practice — but this needs to be confirmed by a solicitor before proceeding
• Indemnity insurance for borderline covenants: Where a covenant may technically have been breached (a historical conversion that may have breached a no-conversion covenant), or where the covenant's application to the intended use is uncertain, it is common practice to obtain restrictive covenant indemnity insurance rather than seeking formal modification. The insurance covers: the legal costs of defending any enforcement claim by the person with the benefit; any injunction or damages award; loss of value to the property if the covenant is enforced. Premiums are typically a one-off payment (not annual) and range from £200 to £1,000+ depending on the risk profile. Indemnity insurance is NOT available where the covenant has been recently drawn to the attention of the person with the benefit (it only covers historic inadvertent breaches — if you have alerted the covenantee, you cannot insure against their enforcement action)

Modifying or discharging a restrictive covenant — LPA 1925 s.84

Where a restrictive covenant prevents a desired use, the Upper Tribunal (Lands Chamber) has jurisdiction to modify or discharge it:

• The s.84 jurisdiction — four grounds: Under Law of Property Act 1925 s.84 (as amended), the Upper Tribunal can discharge or modify a restrictive covenant on application by the person burdened by the covenant, on one of four grounds: (a) Ground (a) — the restriction is obsolete due to changes in the character of the property or neighbourhood (e.g., an originally rural area has become fully residential or commercial; the purpose of the covenant can no longer be served); (b) Ground (aa) — the restriction impedes some reasonable use of the land for public or private purposes and was not intended to be permanent; or the modification/discharge would not injure the persons entitled to the benefit; (c) Ground (b) — the persons entitled to the benefit have expressly or impliedly agreed to the modification or discharge; (d) Ground (c) — the proposed discharge or modification will not injure the persons entitled to the benefit. In practice, Ground (aa) is most commonly relied upon for development and conversion applications. Ground (a) requires clear evidence of changed neighbourhood character
• The application process: A s.84 application to the Upper Tribunal (Lands Chamber) involves: (a) Identifying all persons who may have the benefit of the covenant — this can be complex for estate covenants or where the benefit has passed to multiple successor landowners; (b) Serving notice of the application on all persons with the benefit; (c) The Tribunal's consideration of the evidence — including the nature of the covenant, the original purpose, current neighbourhood character, and any objections from benefited owners; (d) A hearing before a Tribunal judge (usually accompanied by a surveyor member) if objections are received; (e) The Tribunal can modify the covenant (allowing the desired use) or discharge it entirely. The process typically takes 6-18 months and costs several thousand pounds in legal and Tribunal fees (recoverable from benefited owners in some cases). For a simpler application (no objectors; clear obsolescence), the cost may be lower
• Practical steps for BTL landlords: (1) Before purchasing: request full title documents including any covenants in the Charges Register; read the restriction carefully and ask your solicitor whether your intended use (including HMO conversion; subletting; multiple tenants; serviced accommodation) might breach it; (2) After identifying a potentially problematic covenant: get a specialist property solicitor's opinion on enforceability; consider indemnity insurance for historic or borderline covenants; consider a formal s.84 application if the covenant is an active barrier to a material investment; (3) For new-build properties: review the transfer deed and deed of covenant carefully — estate covenants imposed by a live management company are actively enforced; (4) Scotland note: Scottish restrictive covenants are called 'real burdens' and are governed by the Title Conditions (Scotland) Act 2003 — the rules on creation, enforcement, variation, and discharge differ from English law; Scottish landlords should obtain Scottish property solicitor advice on any real burden question

Frequently asked questions