Restrictive covenants on land: Obsolescence, conduct and costs consequences

Key points 

1. Restrictive covenants can derail development plans, even where planning permission is in place
2. Successful objections require evidence, not speculative assumptions or concerns
3. Costs orders in covenant cases are rare but can be obtained where unreasonable objections are pursued or maintained

Restrictive covenants remain a powerful development constraint

Restrictive covenants can significantly affect the use and development of land, even where planning permission has been obtained. Where a restrictive covenant presents an obstacle, a landowner may apply to court for modification or discharge, under section 84 of the Law of Property Act 1925, on one or more of the following grounds:

• the covenant has become obsolete
• the covenant impedes a reasonable use of the land but secures no practical benefits of substantial value or advantage
• the proposed discharge or modification would not injure the beneficiary of the covenant
• the beneficiaries have agreed, expressly or impliedly, to its release

The court (the Upper Tribunal (Lands Chamber) (the UT)) deploys a two-stage exercise: (1) determine whether one of the statutory grounds is made out; and, if so, (2) decide whether, in its discretion, the covenant should in fact be discharged or modified, taking into account all relevant circumstances, including the parties’ conduct.

Modification/discharge v objection: Gauging the court’s approach

The facts and circumstances of every case are different. And the determination of section 84 applications is a discretionary exercise. The best chance to gauge the court’s approach and the prospects of a decision to modify or discharge a restrictive covenant therefore comes from an analysis of case law. We’ve reported on the key cases in this area in our earlier briefings.

The recent case of Domus Living Ltd v Edward VII Estates Ltd, decided over a substantive hearing: [2026] UKUT 287 (LC) and a hearing on costs: [2026] UKUT 407 (LC), is helpful for landowners/developers because it provides guidance on when a covenant may be found to have outlived its purpose and developer conduct in connection with covenant-breach; and, perhaps even more valuable, because it offers a rare insight into the costs consequences which could be imposed on a party objecting to removal/modification.

What happened in Domus Living?

The case concerned a plot within the redevelopment of the former King Edward VII Hospital Estate in Midhurst. The wider scheme involved the restoration of a heritage asset. The scheme was permitted and funded via “enabling development”, which allows a developer to generate a profit to fund the “conservation deficit” [1].

A restrictive covenant affecting the plot required any dwelling to be built in accordance with an earlier planning permission for a four-bedroom house. The development in question, however, was a substantially larger six-bedroom house, built in breach of that covenant. When the sale of the plot encountered covenant-related difficulties as a result, the owner applied to discharge the restriction.

The objector argued that the covenant remained important because the larger house could affect future planning and viability assessments across the wider estate, and therefore prejudice future enabling development. It also argued that the covenant had been knowingly and cynically breached. The UT disagreed and discharged the covenant for the applicant.

What do landowners/developers need to know?

Evidential issues. There was no evidence to substantiate alleged planning and viability risks, and the UT described key aspects of the valuation evidence as fanciful. The UT therefore decided the covenant was not providing any practical benefit of substantial value or advantage, and that discharge of the covenant would not injure the objector.

Obsolescence. On the facts, the UT also found the covenant obsolete. It had been to protect a particular planning permission. However, the land intended to accommodate future residential development had since been transferred to a company that didn’t have the benefit of the covenant and wouldn’t be carrying out further enabling development. The covenant therefore no longer served its original purpose. This aspect of the decision provides a useful reminder that obsolescence is not simply about physical changes to land or the surrounding area – it can also arise through a change in commercial, ownership or development circumstances.

Conduct. The objector argued that the developer had deliberately breached the covenant. It relied heavily on the Supreme Court’s observations in Alexander Devine Children’s Cancer Trust v Housing Solutions regarding “cynical” breaches. The UT accepted that the developer hadn’t properly appreciated the covenant’s existence or effect, but it stopped short of finding dishonesty or a deliberate strategy to disregard the covenant. It therefore distinguished the facts from a genuinely cynical breach.

Costs consequences. The costs decision in this case is of particular interest and is likely to be especially helpful for landowners/developers.

In section 84 cases, unsuccessful objectors aren’t normally ordered to pay costs merely because they lose. This is because of the principle that beneficiaries are generally entitled to defend their property rights. However, where, as here, an objection is pursued without any proper evidential foundation, the position may be different.

This objector continued to advance a hopeless case when the basis for its objection had effectively disappeared (i.e. the land intended to accommodate future residential development had been transferred to a company that didn’t have the benefit of the covenant – the obsolescence point). Its case was based on assumptions rather than facts and evidence. Its expert evidence was “fanciful” and “of remarkably poor quality”.

The UT therefore held that a reasonable person would have withdrawn the objection. In a rare move, it ordered the objector to pay the developer’s costs on the standard basis.

Key takeaways

There are several key takeaways from the Domus case:

• Restrictive covenants remain capable of frustrating development and disposal strategies even where planning permission has been obtained
• Objectors resisting section 84 applications must be able to demonstrate genuine, evidence-based benefits flowing from the covenant
• Speculative concerns about future planning outcomes are unlikely to suffice
• Landowner/developer applicants seeking to rely on obsolescence must show that the covenant’s original purpose has genuinely disappeared. They can look to physical changes to land or the surrounding area, and/or to changes in commercial, ownership or development circumstances
• Conduct is important, particularly where a development has already been carried out in breach of covenant
• Parties should keep the strength of their case under continual review
• Costs orders against objectors are rare but can be achieved where objections are pursued unreasonably or without proper evidential foundation

Dealing with restrictive covenants: How we can help

Domus demonstrates that where a covenant no longer serves any meaningful purpose, provides no practical benefit to its beneficiary and causes no identifiable injury if removed, there’s a good chance a section 84 application will succeed.

Equally, the case underlines that restrictive covenants shouldn’t be treated as an afterthought during acquisition, planning or development. Early investigation and specialist advice are essential to avoid costly disputes and aborted transactions later in the development lifecycle.

Our specialist real estate litigators are experienced and expert when it comes to the enforcement, modification or discharge of restrictive covenants affecting land – whether that be in relation to freehold or leasehold land; and whether it be in relation to strategic risk management at the outset of a proposed development, or in relation to commercial negotiations or legal recourse via an application once a project is underway.

If you’re a landowner or property developer and would like any advice or assistance in connection with the enforcement or relaxation/removal of restrictive covenants, please contact David Manda to discuss.

[1] The requirements for enabling development derive from English Heritage’s Enabling Development and the Conservation of Significant Places, now replaced by Enabling Development and Heritage Assets, and set out in [2026] UKUT 287 (LC).