Practice Area: Company & Commercial Law

One of the social effects of the COVID-19 pandemic was the creation of a fashion for householders to operate businesses from outhouses in their gardens. However, an important tribunal ruling underlined the legal hazards of such a course.

In response to the pandemic, a couple began running a beauty therapy business in a wooden cabin in their back garden. They said that they only subsequently became aware that planning permission was required to allow the cabin’s commercial use. Their retrospective application for planning permission was successful.

That, however, was not the end of the matter: their property’s title deeds included a restrictive covenant which forbade its use for any trade, business or profession or for any purpose other than that of a single private dwelling. Faced with that difficulty, the couple applied to the First-tier Tribunal (FTT) for the covenant to be modified so that they could continue to run their business.

The woman asserted that the covenant took away her right to earn a living. She said that she was constrained by the pandemic to relocate the business to the cabin and that she had a medical condition which prevented her working elsewhere. Unless the covenant were modified, she would be out of work and reliant on benefits.

Three of the couple’s neighbours, however, vehemently objected to the proposed modification. Their concerns focused on such matters as vehicle parking, loss of privacy and impact on property values. The dispute had given rise to such strong feelings that the local police force had sought a resolution.

Ruling on the matter, the FTT found that the cabin’s business use in accordance with the planning permission was reasonable. The covenant was not intended to prevent residents occasionally working from home, alone on a laptop in a spare room. It did not prohibit all activity with a commercial purpose. Low-level business use of an existing building for small-scale business purposes was generally consistent with a residential neighbourhood.

In rejecting the couple’s application, however, the FTT noted that the covenant had been in place for only about 10 years, since the couple bought their newly built home. There was evidence that the neighbourhood’s developer had brought the covenant to purchasers’ attention and explained its purpose.

Homebuyers were offered the opportunity to move into a controlled environment where the appearance of the neighbourhood would remain the same and non-domestic uses would be prohibited. The covenant ensured its preservation as a pleasant place to live.

Every property in the neighbourhood had the potential to be put to business use and, were the covenant modified, objectors feared that would represent the thin end of the wedge, creating a damaging precedent. Overall, the FTT found that the covenant provided a high degree of protection to the amenity of the neighbourhood’s residents and secured for them a practical benefit of substantial advantage. Given that finding, the FTT had no jurisdiction to grant the modification sought.