The reasonableness of restrictive covenants

Restrictive covenants continue to provide significant concern, difficulty and delay for developers. In the recent case of 89 Holland Park (Management) Ltd and others v Hicks (Holland Park), the court was asked to consider the enforceability and extent of two restrictive covenants preventing specific activities in respect of development.

Holland Park concerned two adjoining plots of land in Kensington. In 1965, the then owner of both plots sold the undeveloped site, subject to planning permission, for the construction of a single-storey dwelling. The 1965 transfer contained a positive obligation on the purchaser to develop the planned single-storey development within two years. The transfer also contained a number of restrictive covenants, including the covenants not to make any planning application to modify the approved plan without approval by the seller and not to commence development until the plans, workings and drawings had been submitted to, and approved by, the seller. 

In each case, these covenants were subject to a proviso that the seller should not unreasonably withhold approval…

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