Restrictive covenants and the grey belt: Unlocking development potential

Key points

1. Developers and landowners targeting grey belt sites often need to contend with restrictive covenants
2. We provide an update on grey belt policy and a summary overview of the law on restrictive covenants
3. We offer strategic considerations to help unlock value on grey belt land

Grey belt: From concept to policy

When the Labour Government first introduced the concept of the “grey belt” in 2024, it was presented as a key mechanism for accelerating housing delivery whilst protecting the most important areas of green belt.

Since then, grey belt has become an established feature of national planning policy. The revised National Planning Policy Framework (NPPF), published in August 2026, retains and further develops the grey belt approach, providing greater clarity around how green belt land should be assessed and when development may be appropriate.

The government has continued to promote a sequential approach to development: (1) brownfield land first; (2) grey belt land second; (3) higher-performing green belt land only where justified.

With brownfield land and associated demolition/clean-up often prohibitively costly, and with viable green belt sites increasingly scarce, grey belt development could represent a key area of opportunity.

What’s grey belt land?

Under the current policy framework, grey belt generally comprises previously developed land and other green belt land that doesn’t strongly contribute to key green belt purposes (namely checking urban sprawl, preventing neighbouring towns from merging, and preserving the setting and special character of historic towns).

The August 2026 NPPF revisions have made identifying grey belt land more straightforward, by separating the grey belt assessment from other constraints such as heritage, ecology and flood risk. Those considerations remain important, but they are now assessed separately when determining whether development should be permitted.

Importantly, this means that more sites may now qualify as grey belt.

Planning permission is not the only obstacle

However, whilst planning reforms may have widened the scope for grey belt development opportunities, developers shouldn’t assume that planning consent alone will unlock a site.

Many grey belt sites are located on the edges of existing settlements and are often surrounded by long-established residential communities. Those communities may benefit from restrictive covenants that were originally imposed to preserve character, protect outlook, limit density or restrict future development.

Examples include restrictions which: limit land to agricultural use; prohibit residential development; permit only a single dwelling; restrict density or building types; or prohibit development altogether.

Restrictive covenants therefore frequently provide objectors with an additional means of opposing development, even where planning permission has been obtained.

Consequently, developers may increasingly need to consider covenant strategy as early as planning strategy.

Can restrictive covenants be modified or discharged?

Potentially. Section 84 of the Law of Property Act 1925 gives the Upper Tribunal (Land Chamber) (UT) power to modify or discharge certain restrictive covenants.

Negotiated releases are often possible. However, where multiple beneficiaries exist, or objections are driven by principle rather than compensation, for example, agreement can prove difficult or commercially impractical. In those cases, developers may need to make a court application, under section 84, for modification or discharge of the covenant[s].

Key section 84 grounds

Obsolescence. This remains one of the most challenging grounds [1]. Developers must demonstrate that changes in the character of the surrounding area mean the covenant can no longer fulfil its original purpose. Whilst planning permission may support such arguments, permission alone will not render a covenant obsolete. However, where surrounding land has already undergone substantial development, or where local planning policy has fundamentally changed, the prospects of success may improve.

Reasonable use. This remains the ground most frequently relied upon in development cases. A developer must demonstrate:

• that the proposed development represents a reasonable use of the land; and
• that the practical benefits secured by the covenant are not of substantial value or advantage to those entitled to enforce it.

Given the national emphasis on housing delivery and the increasing policy support for suitable grey belt development, this ground may become increasingly relevant.

No injury. A developer may seek to show that modification would not injure those benefiting from the covenant. This ground is often advanced alongside the reasonable use ground.

Public interest. Historically, this ground has been interpreted narrowly. However, as housing delivery remains a central government objective and local authorities continue to identify grey belt opportunities to meet housing needs, public interest arguments may receive greater attention than they have in the past.

Practical points for developers

Developers considering grey belt opportunities should assess covenant risk at the earliest stage of site appraisal.

Key questions include:

• Are there restrictive covenants affecting the site?
• Who may benefit from those covenants?
• Can beneficiaries be identified and approached?
• Would title indemnity insurance be appropriate?
• Is there a realistic basis for a section 84 application?
• What planning and valuation evidence may be required?

Where a section 84 application is contemplated, coordinated legal, planning and surveying advice can significantly strengthen a developer’s position, both in negotiations and before the UT.

Developers should also be cautious about commencing works where covenant disputes have arisen. The UT has historically been critical of deliberate or cynical breaches and such conduct may adversely affect the exercise of its discretion.

Looking ahead

The planning debate has moved on substantially since grey belt was first proposed in 2024. The question is no longer whether grey belt will form part of the housing delivery solution, but how effectively sites can be brought forward. But whilst planning reforms may open the gate, restrictive covenants often remain the lock.

For developers, investors and landowners seeking to capitalise on emerging grey belt opportunities, understanding and addressing covenant risk is likely to become an increasingly important part of the development process.

Dealing with restrictive covenants: How we can help

Walker Morris’ 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 UT application once a project is underway.

If you are 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 or any member of our Real Estate Litigation team.

[1] Albeit not impossible. The very recent case of Grossart v Ames from the Upper Tribunal (Lands Chamber) is potentially a useful decision for landowners/developers. The UT allowed discharge of a restrictive covenant on the basis it should be deemed obsolete (ground (a) of section 84 (1) of the Law of Property Act 1925) because its original purpose had been fulfilled. The restriction was originally intended to preserve opportunities for future development by retaining control of the access road and services, but development of the retained land had been completed in the interim.