Leicester City’s new training ground stymied by a title covenant
The Leicester Mercury is reporting that a proposed new training ground development at Forest Hill Golf Club and Conference Centre in Leicestershire has been stymied by a covenant that gives Leicester City Council the ability to demand a premium for its release.
According to the paper, Leicester City had been ready to sanction the £2.2m deal to buy the golf club but have now announced a deal for a different location.
A brief review of the Land Registry records for the golf club suggests that the offending covenant was imposed by the Council in 1989 and reads:
“That the purchaser shall forthwith at its own expense commence the construction and erection on the said land hereby conveyed buildings including the construction of a golf course in accordance with plans and drawings approved by the vendor (qua vendor) and complete the erection of such buildings and golf course within five years of such commencement and to keep the same open for the general public for at least fifty years thereafter”.
In normal circumstances, to be enforceable against a future owner:
- A covenant must be restrictive rather than a positive (requiring a person to do nothing to comply rather than take positive steps);
- The person seeking to enforce the covenant must own land which is benefited by the covenant and the benefit of the covenant must be made for the protection of that land;
- The parties must have intended the burden of the covenant to bind future owners.
On the face of it the covenant imposed by the Council is a positive covenant (and falls at the first hurdle) but the covenant is imposed with the intent that Section 33 of the Local Government (Miscellaneous Provisions) Act 1982 act applies. This provision gives the Council the power to impose a positive covenant binding a successor in title in certain circumstances.
The covenant seems to have been imposed for a specific purpose and it is presumed that it was felt that a golf club would provide amenity value to the local community.
Where a covenant is binding and validly imposed, a Council may be right to hold firm and demand “the land’s true value” for its release. Some will argue that a Council would be right to seek a king’s ransom from a wealthy football club for the benefit of tax payers! We suspect that, rather than simply considering the value of a potential ransom, a Council would also consider whether:
- the city’s tax payers are best served by maintaining the land use as a golf club;
- how the potential loss of the golf club will impact on the local community;
- blocking such a sale would lead to the golf club’s longer term failure and risk leaving the land derelict and undeveloped;
- the new facility would provide alternative value to the local community bringing employment and revenue for local businesses;
- the “true value” assessed should be the most valuable use without the covenant or whether a compromise is achievable by imposing a similar covenant maintaining the Council’s ability to realise full value at a later date if the land was developed for a more valuable use (such as housing).
In any event Leicester City has moved on and the club’s press release shows that the club is looking to engage with the community as well as major educational establishments to build a world-class training facility. Partnership and engagement with key local stakeholders and a focus on education has to be a winning formula!