Covenants affecting land have been around for a long time. Most people are familiar with covenants which restrict what can be done with land e.g. preventing development or precluding parking a caravan on a driveway. The government, as part of its 25-year plan to improve the environment, has issued proposals for a new breed of covenant in England: a conservation covenant. These covenants are intended to deliver lasting conservation benefits for the public good.
Conservation covenants are voluntary agreements entered into by a landowner with a responsible body, such as a conservation charity or a public body. The covenants may either stop current and future owners from doing certain things on land or give organisations the opportunity to pay individuals to do certain things with their land.
WHAT COULD A CONSERVATION COVENANT DO?
A number of examples have been provided by the government, such as:
- Altruistic uses – a landowner who has inherited extensive moorland which includes a crag regularly used by rock climbers. The landowner intends to leave the land to his or her children. A conservation covenant is used to ensure that the moorland is properly managed, and that the public continue to have access to the crag.
- An alternative to land purchase by conservation organisations – a wildlife charity identifies a plot of land as containing the habitat of a native bird species. It makes a financial offer to the landowner in return for the land being maintained as a habitat. The landowner agrees. The conservation covenant sets out the obligations that the landowner has to undertake to receive the payment.
- Payment for ecosystem services – an area of woodland upstream of a river that passes near homes has helped to mitigate localised flooding. After negotiations, the landowner agrees to continue with current land management practices, restoring and maintaining the woodland in return for a yearly payment. The obligations for land management and annual payments are set out in the covenant.
HOW WILL A CONSERVATION COVENANT WORK?
A conservation covenant, whether a positive obligation (to do something) or a negative obligation (not to do something), will be able to pass from owner to owner and bind future landowners as well as the person who originally entered into the agreement.
This is different to the current position, as only a restrictive covenant will pass from owner to owner. A positive covenant cannot be enforced by successors to the original covenanting parties.
As the parties entering into the conservation covenant have flexibility to agree terms the duration of the covenant can be limited. If the terms of a covenant don’t restrict its duration, the default position is that the covenant is infinite and will bind successive owners.
WHO CAN ENTER INTO A CONSERVATION COVENANT?
Both freehold owners and tenants of land may enter into conservation covenants. The only restriction on tenants entering into conservation covenants is that they must have a lease which was originally granted for a term of 7 years or more, and which has some time remaining. It isn’t necessary for a tenant to obtain the consent of the freehold owner to enter into a conservation covenant because the covenant cannot extend beyond the remaining term of the lease.
It will only be possible for a landowner to enter into a covenant with a “responsible body”. The government will provide details of who is a “responsible body” in due course.
WHO PAYS FOR THE OPERATION OF THE CONSERVATION COVENANT?
The parties must be satisfied that they can fund the operation of the covenant. Direct public funding will not be available, as conservation covenants are private agreements.
WHO WILL ENFORCE CONSERVATION COVENANTS?
As conservation covenants are private agreements, no public body/third party can enforce them. It would be for the responsible body to enforce through the courts. Parties to conservation covenants will be able to agree to modify or discharge obligations when circumstances change, and to refer disputes to the Upper Tribunal (Lands Chamber).
HOW WILL YOU KNOW IF LAND HAS A CONSERVATION COVENANT AFFECTING IT?
Conservation covenants will be recorded on the Local Land Charges register so they will be shown on a Local Authority Search. The government has included legislation for voluntary conservation covenants in the Environment (Principles and Governance) Bill, which is currently being considered by Parliament.
There has been significant support for conservation covenants, and a number of landowners have said they would consider creating conservation covenants on their own land. It is thought that conservation covenants will be a useful tool for delivering lasting conservation outcomes, and could play an important role in the government’s 25-year plan to improve biodiversity net gain and nature recovery. It has also been noted that a similar tool has been successfully used in other countries.
Conversely, some commentators consider that conservation covenants could be used to hinder or block development and lead to a reduction in the value of property. There are also concerns about the impact on tax relief if agricultural land is reclassified, for example, the land could lose valuable capital gains tax reliefs if it is no longer occupied for agricultural or business purposes, unless it is ancillary to other land used for agricultural and farm purposes. Whilst the government does not think the issues regarding development and land value are a potential threat, it cannot say if the conservation covenants will be tax neutral. However, it does not think they will automatically inhibit agricultural use or farm diversification.
Until further detail is available it remains to be seen whether the conservation covenants will be sufficient to achieve the government’s aim.
Should you wish to discuss this further, or have any questions of how this may affect you, please contact a member of our Real Estate Team.
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