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wingrovebuyer
wingrovebuyer, Senior Solicitor
Category: Property Law
Satisfied Customers: 737
Experience:  Bachelor of Laws (Honours); PG Diploma in Law; Member of ALA; 9 years' experience
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We purchased a council house in the 90s and it had a covenant

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We purchased a council house in the 90's and it had a covenant on it. We were told by the council then when we built an extension that they were no longer that interested in the covenant for certain things and therefore we didn't pay anything to them for the additional building.
Then in 2004 the council sold all the housing stock and it seems our covenant to a housing association (sanctuary housing).
We then got planning permission in 2011 to build a house next to ours in our garden. We then were told by sanctury housing that they wanted £10,000 because of the covenant on the house. When we spoke to the old council they said they would have charged us £200 if they still had the house and not sold on to the housing association.
Therefore can the housing association ask for £10k compared to £200 if it has been with the old council ?. We had to pay the £10k to sell our house in the end as if we hadnt we could never have got our new property. However we want to claim some of this £10k back from them as we feel it was unfair, excessive and put us in a duress position to pay it otherwise our buyer was going to pull out. What can we do as they housing association dont want to know. Their own complains procedure doesnt deal with charges for covenants they say !
Submitted: 3 years ago.
Category: Property Law
Expert:  ClaireD replied 3 years ago.
Unfortunately the housing association can charge whatever they wish in these circumstances even though the charge is hugely disproportionate. Now it is done you can either make a complaint to the housing association or claim it back in court for excessive charges. Housing associations are private companies and therefore unlike councils are not accountable to any body. It may be worth pursuing in the court but the chance of success is probably 50/50.
Customer: replied 3 years ago.

Although is it not true that covenants are not strictly legal or proper ?


 


In R v Braintree DC (ex parte Halls) (2000) the Court of Appeal held that a covenant requiring a property to be used as a single dwelling house is unlawful where the purpose of the covenant was to reserve to the local authority a share of future profits on granting a release since such purpose did not promote the policy and objectives of the right to buy legislation. Local authorities should, if they wish to impose such a covenant which they wish to enforce by injunction, rather than by a consent or release in return for payment reflecting an increase in value, ensure that the decision making process in deciding to impose such a covenant clearly shows that the purpose is not for financial gain but for some other proper purpose.



My concern is that is the covenant legal for them to have a proportion of any future profit that could be made from the house due to extensions or builds. Also is it fair that the council charge £200 and the housing association charge £10k - the housing association took over all aspects of the council housing stock and therefore the rights and charges should have remained the same or within a reasonable bracket. £9,800 extra seems very excesive.


 

Customer: replied 3 years ago.
Relist: Answer quality.
Expert:  wingrovebuyer replied 3 years ago.
Hello. I'll pick this up. Can you let me have the wording of the covenant in question please?
Customer: replied 3 years ago.

I will dig out a copy of it

Expert:  wingrovebuyer replied 3 years ago.
Thanks
Customer: replied 3 years ago.

is it possible to attach or send pdf's

Customer: replied 3 years ago.

ok found the wording. Basically in the deeds of the house it states:


 


THE SECOND SCHEDULE before refered to:


 


4. Not to construct or permit to be constructed upon the premises any dwellinghouse other than the dwellinghouse existing upon the premises at the the date hereof or any replacement thereof.


 


 


We got planning permission for a house on the land next to ours. So when we sold the property we could sell our house with planning permission for another next door. However in order to sell it with the planning permission we had to get the above removed from the deeds as it was a covenant.


 


The council told us if they still had the housing stock or rights they would charge us nothing at at worst maybe 200GBP legal fees to remove this clause. The housing association have made us pay 10,000GBP to remove it so that the new buyer has the right to build on the land.


 

Expert:  wingrovebuyer replied 3 years ago.
Hello. Thanks. I'm afraid my view is similar to that expressed previously. First, you have actually paid the money. Regardless of whether or not you felt you had a choice at the time, paying the money has effectively acknowledged the right of the association to charge for releasing the covenant, whatever the reason it is was initially imposed. Once paid, unless youcan prove fraud, I'm afraid I don't think you can claim a refund.

Secondly, the Braintree case turned on its own circumstances. Your circumstances could be different, in that the covenant was imposed for other reasons, not for financial gain. It could have been imposed to maintain the integrity of the estate, for example, or to ensure a particular size of garden. If this is the case, and there is no other benefit than financial gain, the covenant would have been enforceable and the beneficiary would be entitled to charge whatever it wanted to release the covenant, as it is an absolute prohibition on a second property on the plot, not a conditional one.

All in all them I am sorry to say that the association was probably entitled to charge a release fee, it could set that fee as it pleased, and you won't be able to recover the money. the fact the council wouldn't have charged much is not relevant.

Sorry this isn't what you wanted to hear. However, I have to give you the guidance I feel is right.
wingrovebuyer, Senior Solicitor
Category: Property Law
Satisfied Customers: 737
Experience: Bachelor of Laws (Honours); PG Diploma in Law; Member of ALA; 9 years' experience
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