Legal Covenants and Letting Out a Property
Legal cases in the UK depend upon appeal to precedent. Cases where previously untried circumstances are subject to court judgement can therefore turn out to be hugely important. It is not often than test cases crop up in the field of property law but a recent judgement handed out at Northampton County Court has been highlighted as potentially having major significance for landlords in the future.
The case is focussed on a property on Churchill Avenue in Northampton that was inherited by the landlord, one Reshat Tasher. Having inherited the house, he proceeded to rent it out to a tenant who set up and ran a child-minding service on the site. The neighbours living immediately next to the house took Tasher to court on the basis that there was a covenant pertaining to the property that restricted it from being used for business purposes.
The neighbouring couple who instigated the prosecution originally complained to the landlord on account of the increase in the amount of noise coming from the house. However when they took the case to court they added the charge that no business could be run from the property owing to the covenant, nor should it even be being let out as this represented commercial use. The terms of the covenant, they argued, meant that the landlord had either to move in himself or sell the property to an owner who would do so.
The reason the neighbouring couple knew of the covenant was that the entire area is also bound by its terms, with over 300 people affected by terms written into the deeds of their homes.
The judgement on the case was twofold: the child-minding business operated by the tenant was deemed to break the covenant and so should prompt eviction. However, the substantive issue pursued by the plaintiffs was dismissed by the judge on the basis that letting a property does not represent business use. The couple making the complaint were consequently ordered to pay the legal costs of the landlord.
It is this second part of the judgement that is of significance, that a property that has a covenant restricting it from being used for commercial purposes can be let out to a tenant. Immediately, this is of value to those living around the Northampton property whose homes fall under the same covenant and to other homeowners who live in properties with similar restrictions written into their title deeds.
As this is the first time this issue has reached court, the judgement means that those homeowners are now protected if they wish to let out their home, despite the covenant. Moreover, buy-to-let landlords who previously may have steered clear of the legal complexities of covenanted properties now have legal precedent behind them if they wish to invest in such a property for the purposes of renting it out.