Restrictive Covenant / HMO

[SteveFLS]

I am hoping - post divorce - to retain what was the family home in Durham City and use it for a small HMO let to students, the change of use is a Permitted Development and the house is not subject to any article 4 Direction, the HMO makes financial sense..BUT their is a Restrictive Covenant " not to use or permit to be used other Han as a single private dwelling house " and I have confirmed that all of my immediate neighbours have the benefit of the Covenant and will likely not welcome an HMO.

I'm aware of the case Authority Roberts v Howlett 2002 - coincidentally a Durham City -case where it was held that a covenant with same wording as mine did not prevent the property being let to a ' pre-formed group of friends / students' but subsequent legislation / case law might have changed that position. I have not been able to obtain legal indemnity insurance.

It's probably a shot in the dark but wonder if anybody here has any views or thoughts please - realise I'm probably going to have to find a specialist solicitor but thought I'd see if anybody here has any advice please ?

[SteveFLS]

Thank you very much Equus, I'm thinking that letting to second or final year students who formed friendship group after sharing Hall or other accomodation might satisfy the requirements as per Roberts v Howlett, would welcome your thoughts please?

[SteveFLS]

I really want to avoid any legal battle but am thinking that it might be worthwhile taking legal opinion about whether the RC prevents HMO & what % chance likelyhood of it being enforceable, if the opinion in my favour and the % favourable I would re - visit potential legal indemnity insurance with the formal opinion, if uninsured litigation probable I will probably sell the house and think again, does that make sense ?

[SteveFLS]

Yes I'm definitely wanting to use the property as an HMO and hoping that the RC doesn't prevent it, the stated case seems clear from what I know of it to date but that was a while ago so interested to know what the current position is, if there's potential for legal challenge then indemnity insurance would make sense.

[SteveFLS]

Thanks very much inkyfingers, I don't want to be in dispute with my neighbours and the legal advice will determine next steps, my house is close to some flats many of which are let mainly to overseas students. - mostly Chinese- and the Durham students generally are a pretty tame lot so don't anticipate too much difficulty if / when I get the HMO running and do take your point on the amount of work needed to ensure compliance with HMO regs etc, also take on board your points about future use / saleability when we see what ' the new normal ' post Covid looks like...

[SteveFLS]

Thanks Briman, actually we bought the house to be the family home with no thought of letting it out but soon after I found out that my wife was cheating on me and we are in the middle of divorce, we put the house up for sale as a result and had offers from people wanting it for HMO use. I had recently retired from the Local Authority after 37 years in child protection and now looking at losing a good part of my pension so decided to explore possibility of buying my ex out of the house and using it as an HMO myself, have always get along very well with my neighbours and I would be a good landlord making sure tenants don't cause any problems - I wouldn't contemplate doing anything illegal or landing me with litigation but if there is the option of somebody benefiting from the house don't see why it shouldn't be me.

[SteveFLS]

Thanks Brman, I think it's possibly a legal - hence my first post - rather than a moral issue, I might be overthinking things as we already have students living nearby and it's not caused any problems but these are two bed flats so not in need of licence. The title deeds that detail the covenants are readily available from Land Registry for £7 ( £3 if you're a solicitor or other professional with an account) and I expect both potential buyers will have seen the deeds before making offers on the place - both are ( separate) experienced landlords / developers in the student market.

It's possible that the covenant doesn't present any barrier to HMO use but I'm risk adverse and will only go ahead if the covenant either definitely doesn't present a risk or if any risk of challenge such that it can be mitigated via legal indemnity insurance - I think this is difficult to obtain if you've alerted other interested parties in advance of seeking cover and you have a duty to disclose all the facts to the potential insurer. It's looking very likely that I'll need to pay for some expert legal advice but my divorce final financial Hearing a little while away and I've time to do my own research too in the meantime.. Cheers

[SteveFLS]

Thanks Equus, I think the key point here is whether the covenant was drafted / intended to prevent use as HMO, hence my first post, if not the -current- level of demand for good student accomodation such that if I don't change use to HMO somebody else likely will. I've checked out the potential for family let and while definitely more straightforward it would generate 30% less income than HMO use so not financially viable for me.

[SteveFLS]

Thanks Equus, the covenant does seem to preclude use as HMO until Roberts v Howlett is considered which is where we started this post, I was hoping that there might be more info available that supports this still to be the case but equally helpful if anybody knows anything to the contrary. I don't think it's a matter of quibbling but rather am information gathering in advance of asking legal advice, obviously case authority and context might have to be considered by Court ultimately but that's an avenue I'm very reluctant to go down unless able to mitigate the risk with indemnity insurance.

Paul - I wouldn't rent out to students other than as a properly licensed C4 small HMO using AST fully compliant with the RC and Planning Consent, It would be managed by a reputable letting agent though I'm happy to be involved to some extent as I will be living not too far away. I worked professionally for a long time supporting young people and wouldn't be doing anything to jeopardise their rights or position as tenants.


Although more costly to run as HMO than as a family let and certainly with more legislation and involviment with the the Local Authority the 30% figure represents a net £800 -£900 per month to me at a time when my pension income is about to take a big hit in divorce proceedings. Am very conscious that all of the above also comes with the caveat re ' the new normal ' post C-19 especially since the university currently attracts a high number of overseas students. Thanks very much for your input guys..

[SteveFLS]

Thanks again Equus, I guess I'm looking for what the courts have accepted as being a ' pre - formed single household ' though unrelated. This could inform whether worth the trouble of taking it further however propties in the immediate area have done well in terms of capital growth over the last few years with the city being in something of a bubble compared with most other parts of the county - so thinking that it might be worth taking the trouble as could generate income for me and provide a useful asset for my adult kids for when I fall off the twig...Steve

[SteveFLS]

Thanks very much both, food for thought !

[SteveFLS]

Thanks both, do we think that the RC would prevent me from keeping the house in C3 and letting it to a group of students on a joint & several liability AST ? The house would remain a ' single private dwelling house ' ?