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/ 17 Jan 2020

Leasehold Covenants

Contained within the Leases of long residential leasehold properties will be several Leasehold covenants. Whilst the new Leaseholder may not have been a party to the original Lease, upon purchasing a leasehold property, the new owner will be subject to the covenants contained within it. Unbeknownst to the prospective purchaser, these will restrict the way in which the Leaseholder can use the property. But what exactly are covenants?

 

Jack Glover

Solicitor

Property Litigation & Dispute Resolution

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In simple terms, a covenant is a promise made by deed. By entering into a covenant, one party will promise to do, or refrain from carrying out a certain action in relation to a piece of land. The party who agrees to take on the obligation created by the covenant is said to take the burden. The other party takes the benefit of the covenant.

Covenants can be either be negative/restrictive or positive in nature. Negative/restrictive covenants restrict the way in which the party subject to the burden of the covenant can use the land. In other words, the Leaseholder must refrain from carrying out a certain action. A common example in residential leases is to prevent the sub-letting of the property without the consent of the Landlord.

In contrast, positive covenants place an obligation on the individual to carry out a certain activity. For example, to repair or redecorate the property at regular intervals.

Often, a covenant will be expressed in the negative, but in fact require a positive action. For instance, leasehold covenants may stipulate that the Leaseholder should not allow the property to ‘fall in to disrepair’. At first sight, this appears to be restrictive covenant. On the contrary, such a covenant places an obligation on the Leaseholder to repair the property, which clearly requires a positive action on their part.

It is therefore the substance of the covenant, rather than the wording which determines whether it is negative/restrictive or negative.

Long residential leases will contain a number of covenants restricting the way in which the property can be used. Depending on the nature of the property, these will vary in number and extent. Common examples of Leasehold covenants include;

1. To pay the ground rent and service charge when demanded;
2. Not to carry out any internal alterations to the property without the Landlord’s consent;
3. Not to sublet the property without the Landlord’s consent;
4. To repair the demised property at regular intervals;
5. To keep the floors of the property covered with suitable material (i.e carpets) to prevent the transmission of noise.

The above place clear restrictions on how the property can be used. Therefore, it is important when purchasing a Leasehold property, (amongst other matters), that careful consideration be given to the Lease in order to be aware of the covenants contained within it and your obligations under them so as to ensure you do not find yourself to be in breach.

If you are looking to purchase a Leasehold property, or have another property related enquiry, please do get in touch with Hanne & Co’s Property team who will be more than happy to assist. You can reach us on 020 7228 0017.

Jack Glover explains leasehold covenants

Jack Glover is a trainee solicitor at Hanne & Co’s Property department

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