Home deeds stop childminders from working

• Childminders could be stopped from running businesses from home on new developments
• PACEY blames the rules for fall in childminder numbers

Prospective and existing childminders are being prevented from setting up or continuing to run their businesses from home because of restrictions in their property title deeds.

The Professional Association for Childcare and Early Years (PACEY) says it is increasingly hearing reports of childminders unable to start a business, and existing childminders who move home and are unable to continue to work, because of a covenant preventing owners from trading or operating a business on the land their property is built on.

PACEY believes this could be contributing to the decline in the number of new childminders in recent years.

One childminder in Gloucestershire was recently told she must stop working due to a restrictive covenant on the deeds of the house she purchased five years ago and in which she has been childminding ever since. This followed a dispute with a neighbour in which the restrictive covenant was raised.

Councillor Richard Boyles, cabinet member for children and young people, said, ‘To our knowledge this is not an issue in Gloucestershire. However, we have raised the concern with PACEY, which is looking into the issue nationally.

‘We are also working with district and borough councils to find out if restrictive covenants are likely to have an impact on childcare placements in future.

‘Although the council is only responsible for delivering training for childminders, we do advise people to check if any planning or licensing restrictions are in place before applying to become a childminder.’

Another childminder in Cambridgeshire who moved to a new housing development has also been affected.

PACEY’s service manager in Cambridgeshire, Caroline Maryon, said, ‘We came across the problem in Cambridgeshire when a childminder was moving into a newbuild in the county, having been a childminder for a few years elsewhere.

‘Her solicitor picked up the restrictive covenant in the contract, but after some negotiation she was allowed to continue to be a registered childminder, but could not advertise her business locally.’

PACEY has since heard of someone else who wanted to become a childminder on the same development, but the contractors would not allow this.

Ms Maryon added, ‘We are now aware that the covenant is used quite widely across Cambridgeshire for newbuild developments, and PACEY and the county council childcare places planning team are currently in discussions about the implications for parental choice of childcare.

‘I am also planning to discuss with district councils whether they can look at this issue when granting planning permission for new developments.’

What are restrictive covenants?

Restrictive covenants are described by the HomeOwners Alliance as ‘binding conditions that are written into a property’s deeds or contract by a seller to determine what a homeowner can or cannot do with their house or land under particular circumstances’.

They can cover a wide range of issues, but preventing trades or businesses from operating on the land is one of the most common examples.

Restrictive covenants are mainly included within deeds for ex-local-authority properties bought through the Right to Buy, and newbuilds. However, not all of these properties’ deeds contain restrictive covenants and, if they do, they won’t necessarily state that the owner cannot run a business from home.

Paula Higgins, chief executive of the HomeOwners Alliance, said, ‘Restrictive covenants are fairly common. Most newbuild homes will come with some restrictions…however, we’ve heard of some stringent and downright bizzarre ones such as banning washing lines. As the number of newbuild developments increases, we’re seeing even more buyers affected.’

According to the HOA, if a homeowner is found to be in breach of a restrictive covenant, for instance running a business from home, then they could be forced to close their business, pay a fee – which could be thousands of pounds – or face legal action.

Its website states, ‘Where an owner has breached a covenant for over 12 months without challenge, they should be able to get restrictive covenant insurance to protect what they have done.

‘In some cases, very old covenants are considered unenforceable because the original landowner or builder cannot be traced, the wording is ambiguous, or the covenant has become historically obsolete.’

PACEY’s director of membership and services Sue McVay said, ‘PACEY is hearing increasing reports from across the country of established and prospective childminders being told they cannot operate due to a restrictive covenant on their property that prohibits running a business from home.

‘It seems likely that this is a contributing factor to the declining numbers of new childminders in England.

‘However, childminding businesses are unique, and are run from domestic premises.

‘In most cases, their home is still classed as a domestic property, with no material change of use, and they are not normally subject to business rates or a host of other regulations affecting businesses.

‘It is absolutely vital that local authority planning officers, housing developers, mortgage companies and landlords understand that preventing childminding businesses from operating will only serve to limit the choice and availability of flexible childcare, making it harder for parents to work and ultimately limiting the economic prospects of their communities.’

Expert advice

Peter Westbrook, partner and head of residential property at Attwaters Jameson Hill Solicitors, explains what restrictive covenants are and what home owners can do. ‘Covenants are very common. They are probably on every freehold deed.

‘A covenant is a legal agreement. You can have restrictive or positive covenants. For example, a positive covenant could be agreeing to erect a fence around a property’s boundaries. Restrictive covenants include agreeing not to play music at certain times of the day or not to make external changes to the appearance of a property before getting permission.

‘The restrictive covenants in the deeds for Harlow Council, the area in which I work, state no trade or business whatsoever must be run from a property, and “to use the property only as a single private dwellinghouse”.’

However, Mr Westbrook says some local authorities, or other landowners, may permit some businesses if they don’t conflict with the landowners’ business. For instance, a local authority or landowner selling properties may allow them to be used as a dentist’s practice or doctor’s surgery.

‘With restrictive covenants, it very much depends on the local authority/landowner. Some deeds will have them in and some won’t.

‘When buying a property, a solicitor should always point out the covenants on deeds. The trouble is that most buyers don’t take the information in.

‘To find out if they have restrictive covenants in their deeds, home owners can do a search on the Land Registry website by house number and name, where they can obtain a copy of their legal title for £3.’

According to Mr Westbrook, restrictive covenants are enforceable and are most likely to be enforced if neighbours complain about business activity or noise. So what can homeowners do?

‘While homeowners can approach their landowner, their local authority or developer for consent, it can be a costly and time-consuming exercise.

‘Some developers or local authorities will use consent as an income stream.’

Mr Westbrook advises homeowners who have broken a restrictive covenant by running a business, and who have been running the business for at least 12 months, to take out an indemnity insurance policy through solicitors specialising in conveyancing. He says this is a much cheaper and easier option.

However, the prerequisite is that the homeowner hasn’t approached anyone for consent, he says. If a homeowner has applied for consent and didn’t receive it, they won’t be eligible for an insurance policy.

‘Indemnity insurance won’t stop a restrictive covenant from being enforced, but it will mean homeowners will have money behind them if they should be taken to court.’