How a covenant problem turned into a profitable sale for one property investor
Like many property investors, or ‘property speculators’ as they prefer, Julian and Helen Bradwell have a small portfolio of investment properties. Julian also has a ‘day job’, so not a big business, but a regular and important business for them. Success for them relies on being able to renovate and sell their investment properties quickly or retain them and rent them out. Either way, the last thing they want is an unforeseen legal issue preventing a profitable sale.
Having bought and extended a semi-detached investment property in North Oxford within 6 months, they agreed a sale and looked forward to exchanging and completing the sale. Unfortunately the title deeds highlighted an 80 year old covenant restricting any change to the appearance of the house, which could be interpreted to mean the extension was illegal.
The buyers wanted to build a garden room at the property and their solicitors approached the Council to determine if any payment was owing to the Council under the old covenant. Following an inspection the Council noticed the extension and claimed the covenant was enforceable which meant that Julian and Helen Bradwell faced a hefty £38,000 sum to remove the covenant and allow the extension to remain. Ronald Peet who heads the Residential Property team and James Barnatt in the Commercial Property team were enlisted to fight the decision on behalf of the couple.
Julian comments: “As other properties in the area had altered appearances we didn’t think this old covenant would prevent the sale. No one had been interested in it before and I knew that Ronald was the best man to deal with this detailed planning issue. He’s been giving me property advice for 15 years and I’ve always liked the way he works with me and for me.”
The first priority was to either remove the covenant or negotiate a substantial reduction in the sum facing Julian and Helen. James tried to fight the Council on the basis of the covenant being obsolete and unenforceable. Heavy negotiations by James and Julian resulted in a 78% reduction to an agree £8500.
“We knew James from previous work he’d done for us so we knew we could rely on him. I did some of the negotiating, but this was James’ area of expertise and he spoke the ‘solicitor language ’disputing the enforceability and pushing the Council to move things forward.”
Completing the sale as quickly as possible was Julian and Helen’s priority, but the Council was slow in granting formal consent. So Royds Withy King was able to use some innovative thinking to allow the sale to exchange and complete quickly by retaining a portion of the sale proceeds while still pursuing the Council for formal consent. We are continuing to fight for Julian and Helen with the Head of Estates at the Council.
Julian concludes: “I always recommend Ronald to others. Having the combined forces and skills of Ronald and James working for me worked really well. I understood them and they work to the time-scales and pace that I like. They both respond to me by phone or email and always with clear instructions and advice. Being local made it all convenient too.”
If you have any investment property issues, contact us on 0800