Planning Permission and Restrictive Covenants: Why Consent Does Not Always Mean You Can Build

Illustrative image only. It does not depict a Realty Packaging property.

A property can have planning support for a proposed change and still be unable to proceed.

The reason is that planning permission and restrictive covenants operate under different systems:

• Planning permission is public-law consent from the local planning authority. It controls whether development or a material change of use is acceptable in planning terms.
• Restrictive covenants are private legal restrictions in a title, transfer, conveyance or lease. They control what an owner or occupier may do with the property.

Both can apply to the same shop-and-upper property. A covenant can prevent a development that planning permission would otherwise allow. Planning permission does not override a private covenant.

This distinction is central to commercial property due diligence and should be addressed before exchange.

Key terms in plain English

Planning permission

Planning permission is consent from the local planning authority for development. Development can include building work, structural alterations and material changes of use.

The local authority considers matters such as use, design, highways, noise, flood risk and the effect on the surrounding area.

Permitted development rights

Permitted development rights are national grants of planning permission for certain works and changes of use. They are set out mainly in the Town and Country Planning (General Permitted Development) (England) Order 2015.

Some rights are subject to prior approval. This means the developer must ask the local planning authority to assess specified matters before work begins.

Class MA permits a change of use from Class E commercial, business and service use to Class C3 dwellinghouses, subject to conditions and prior approval. It does not remove private restrictions.

Restrictive covenant

A restrictive covenant is a private obligation not to do something. Examples include:

• “Not to use the premises otherwise than as a shop.”
• “Not to use the property for residential purposes.”
• “Not to alter the building without consent.”
• “Not to build beyond a specified line.”

The covenant may appear in a transfer, conveyance, lease or separate deed.

Positive covenant

A positive covenant requires an owner or occupier to do something. Examples include maintaining a boundary wall, repairing a structure or contributing to a shared road.

The section 84 route under the Law of Property Act 1925 applies to restrictive covenants. It does not allow the Upper Tribunal to discharge or modify a positive covenant.

Enforceability

A covenant may bind later owners if the legal requirements are satisfied. These can include the covenant touching and concerning the land, being properly registered or noted, and having a party entitled to enforce it.

The position depends on the wording and the title history. A covenant should not be treated as unenforceable without legal advice.

Why covenants matter for shop-and-upper properties

Mixed-use property often contains several layers of control.

A ground-floor shop may be let under a lease that restricts use to retail. The freehold title may contain a separate covenant preventing residential use of the upper floors. The lease may also require the landlord’s consent for alterations, subdivision or a change of use.

A buyer planning to convert the uppers into flats may therefore need to satisfy:

1. The planning rules.
2. Any Class MA conditions and prior approval requirements.
3. The freehold title restrictions.
4. The lease user and alteration covenants.
5. Any planning conditions or section 106 obligations.
6. Building regulations and other statutory requirements.

A section 106 planning obligation is not the same as a private restrictive covenant, but it can impose obligations connected to the land and bind successors. It may restrict use, require contributions or impose delivery obligations. It must be reviewed alongside the title and planning documents.

A covenant can therefore destroy a Class MA conversion plan or make a change-of-use strategy commercially unviable.

Illustrative image only. Documents shown are not connected with a specific property.

Planning permission does not override a covenant

The GOV.UK guidance on when permission is required states that land ownership and restrictions through deeds or covenants are not planning matters.

The guidance also states that permitted development rights do not override other permission, regulation or consent regimes.

The Upper Tribunal’s T608 guide makes the position clear: a restrictive covenant can prevent development even where planning permission has been granted.

If a covenant blocks the proposal, possible routes include:

• Consent from the person with the benefit of the covenant.
• A deed of release.
• A deed of variation.
• Landlord’s consent under the lease.
• Restrictive covenant indemnity insurance.
• An application to the Upper Tribunal under section 84.
• A revised scheme that complies with the covenant.

The correct route depends on the document, the parties, the proposed works and the lender’s requirements.

How to find the restrictions

A proper review should include:

• Official copies of the freehold title.
• Official copies of any leasehold title.
• The title plans.
• The transfer or conveyance referred to in the register.
• The lease and plans.
• Deeds of variation, licences or supplemental agreements.
• Planning permissions, conditions and section 106 documents.

The title register may identify a covenant affecting the property. It may not identify the land that benefits from the covenant or the current person entitled to enforce it. Older conveyancing documents may be needed.

The HM Land Registry Practice Guide 19A provides relevant guidance on restrictions and leasehold property.

Who can enforce a covenant?

Usually, enforcement depends on the current owner of the land that has the benefit of the covenant.

The benefited land may need to be identified from the original deed, title register, title plan and later transfers. The benefit may have been annexed to land, assigned or transferred through a chain of ownership.

A covenant may be unenforceable if the benefit was not properly created or transferred. That conclusion requires a legal review. The fact that a beneficiary is difficult to find does not automatically mean the covenant can be ignored.

Options if a covenant blocks the plan

Negotiate a release or variation

A negotiated deed of release removes the restriction. A deed of variation changes its wording or limits it to a particular scheme.

The beneficiary may request a payment, legal costs, plans, design controls or other protections.

Obtain landlord’s consent

A lease may contain an absolute restriction, which prohibits an act without consent, or a qualified restriction, where consent is not to be unreasonably withheld.

The wording matters. Where the Landlord and Tenant Act 1988 applies, a landlord must respond to a qualifying application within a reasonable time and must not refuse consent unreasonably.

Do not assume that a refusal is unreasonable. The lease wording, proposed works, building impact and landlord’s legitimate interests must be considered.

Apply under section 84

Section 84 of the Law of Property Act 1925 gives the Upper Tribunal (Lands Chamber) power to discharge or modify restrictive covenants in defined circumstances.

Possible grounds include:

• The covenant has become obsolete.
• It impedes reasonable use of the land.
• It provides no practical benefit of substantial value or advantage.
• The persons entitled to the benefit have agreed to the change.
• The proposed change will not injure those entitled to the benefit.

The legislation should be read with current procedural guidance. The Tribunal will consider the planning context, but planning permission alone is not decisive.

A section 84 application is formal. It can involve a filing fee, notices to beneficiaries, evidence, expert reports, a hearing and costs. Compensation may be payable.

Consider indemnity insurance

Restrictive covenant indemnity insurance may be available where a covenant is historic, the beneficiary cannot be identified or enforcement risk is uncertain.

Insurance does not remove the covenant. Contacting a potential beneficiary before obtaining cover can affect availability. A lender or future buyer may also require a specific policy, a report on title or a different solution.

Restructure the scheme

A revised scheme may avoid the prohibited use or reduce the works requiring consent. This can be preferable to a contested release or tribunal application.

Illustrative image only. It does not represent a specific consent or site.

Class MA in practice

Class MA applies in England to a change from Class E to Class C3 dwellinghouses. Prior approval may cover transport, contamination, flooding, noise, natural light and other specified matters.

The 2024 Amendment Order, which came into force on 5 March 2024, removed the previous vacancy requirement and the floorspace cap for Class MA.

These changes do not override:

• A restrictive covenant prohibiting residential use.
• A lease restricting use to retail or another use.
• A covenant requiring consent for structural alterations.
• A planning condition or section 106 obligation.
• Building regulations or other statutory requirements.

Check the current legislation and local position before relying on Class MA.

Worked examples

Example A: Shop-and-upper conversion

A freehold shop-and-upper property in London has a value of £600,000. A 1970 transfer states that the premises must not be used otherwise than as a shop. The buyer plans to convert the upper floors into flats under Class MA.

The covenant may prevent the residential use even if prior approval is obtained. The buyer should identify who has the benefit, seek a release, consider insurance and obtain legal advice before exchange.

Illustrative costs might include:

• Solicitor’s title review: £1,500.
• Deed of release negotiation: £2,000–£5,000, plus any payment to the beneficiary.
• Tribunal application: £999 filing fee, plus legal costs if negotiations fail.

These figures are illustrations, not quotes. Current fees and professional costs must be confirmed.

Example B: Mezzanine works

A lease requires the landlord’s consent for alterations. The tenant applies to install a mezzanine. The landlord refuses.

Whether the refusal is reasonable depends on the lease wording and the circumstances. The tenant should not start work without consent, a valid determination or other appropriate protection. A court or tribunal may need to determine the issue.

Example C: Missing beneficiaries

A historic covenant was imposed by a developer that no longer exists. The original beneficiaries cannot be located.

Indemnity insurance may be available, but it is not guaranteed. The covenant remains in place. A lender may require a report on title, evidence of searches and a policy before funding.

Realty Packaging’s Four Pillars

At Realty Packaging, our review of mixed-use commercial property is structured around four pillars:

1. Lease : user clauses, consent requirements, terms, rent and landlord obligations.
2. Planning : existing use, proposed use, permissions, prior approval and planning obligations.
3. Building condition : structure, services, fire safety and conversion requirements.
4. Operational compliance : statutory compliance, access, licensing and ongoing property obligations.

Restrictive covenants sit across the lease and planning pillars. They should be reviewed before exchange, not after a purchase has been based on an assumed conversion value.

This approach supports disciplined commercial property investment in the UK and helps investors assess property portfolio growth opportunities on a risk-adjusted basis.

Investor checklist

Before exchange:

• Obtain official copies of all relevant titles.
• Read the transfer, conveyance, lease and deeds of variation.
• Identify every covenant and consent requirement.
• Establish who may have the benefit of each covenant.
• Confirm whether the scheme needs planning permission or prior approval.
• Check whether any covenant blocks the proposed use or works.
• Review planning conditions and section 106 obligations.
• Obtain advice on release, variation, consent, section 84 or insurance.
• Check lender requirements.
• Budget for professional fees, beneficiary payments and compensation.
• Confirm the proposed return still works if the scheme is delayed or changed.

Property structuring may also affect the outcome. Investors should obtain tax advice on whether a limited company or LLP is suitable, how capital allowances may apply to qualifying commercial fixtures, and whether any tax-advantaged investment strategy is available. Tax treatment depends on the facts and should not be assumed from the property model.

Sources

• GOV.UK: When is permission required? : explains planning permission, permitted development rights and the separate status of private covenants.
• GOV.UK: T608 guide : explains restrictive covenants and the Upper Tribunal process.
• Law of Property Act 1925, section 84 : provides the statutory power to discharge or modify restrictive covenants.
• GPDO 2015, Class MA : sets out the Class MA right.
• GPDO Amendment Order 2024 : removed the Class MA vacancy requirement and floorspace cap.
• HM Land Registry Practice Guide 19A : covers restrictions and leasehold property.

This article is for general information only. It is not legal, planning, tax or financial advice. Obtain advice on the specific property and proposed scheme before making a decision.

For information about commercial property investment and development projects, visit Realty Packaging. You can also review our commercial conversion example.

Contact: support@realtypackaging.co.uk or Rachel on +44 20 4513 2218.