Case law update: Court upholds power of restrictive covenants in landmark Manchester case

A recent Court of Appeal decision has sent a clear message to developers: planning permission does not automatically override restrictive covenants in a lease.

In Great Jackson Street Estates Ltd v The Council of the City of Manchester [2025] EWCA Civ 652, the Court upheld the strength of long-standing lease restrictions and confirmed that landlords (including local authorities) can rely on such covenants to retain control over redevelopment.

What happened

Great Jackson Street Estates Ltd (GJSE) held leases of two former warehouse sites in Manchester’s city centre. The leases contained covenants preventing redevelopment or changes of use without the landlord’s consent.

GJSE secured planning permission to demolish the warehouses and build two residential towers, each around 56 storeys high. However, their landlord, Manchester City Council (which also happened to be the local planning authority), refused to grant consent under the lease.

The Council proposed granting a new long lease with conditions to safeguard the development, but GJSE instead applied to the Upper Tribunal to remove or modify the restrictive covenants. It argued that the covenants were outdated and provided no real benefit to the Council.

The Tribunal disagreed, and the Court of Appeal has now upheld that decision.

What the Court decided

The Court found that the covenants still gave Manchester City Council “practical benefits of substantial value or advantage.” In other words, the restrictions helped the Council ensure that redevelopment of the area happened in a controlled and coordinated way.

The Court agreed that these benefits went beyond financial considerations. They gave the Council the ability to:

• make sure redevelopment took place safely and in line with the city’s wider regeneration plans
• avoid the risk of stalled or incomplete projects
• maintain standards and consistency across the area.

Because of this, the Court ruled that it would not be fair or appropriate to remove or change the covenants.

Why this matters

This case highlights an important point for developers and landowners alike. Even if planning permission is granted, restrictive covenants in a lease can still prevent redevelopment.

The Court’s decision shows that the power to modify or remove covenants under section 84 of the Law of Property Act 1925 will be applied cautiously. Developers face a high hurdle in proving that a covenant no longer serves any real purpose or provides no benefit to the landlord.

For local authorities and other landlords, the decision is a reminder that restrictive covenants remain a valuable tool for managing land use and redevelopment. They can help ensure developments fit within broader community and planning objectives.

What this means in practice

• For developers: Always review lease terms early in a project. Planning consent alone may not be enough to start work if restrictive covenants remain in place. Engage with landlords at an early stage to discuss potential lease variations or new terms.
• For landlords: This case confirms that restrictive covenants can provide genuine practical benefits beyond financial value. They can help preserve the quality and pace of development in key regeneration areas.

Looking ahead

The developer may seek permission to appeal to the Supreme Court, so this may not be the final word on the issue. However, for now, the decision underlines that the courts are reluctant to interfere with existing lease obligations unless there is a strong reason to do so.

How Ashtons Legal can help

At Ashtons Legal, our property and real estate team advises both developers and landlords on all aspects of land use, redevelopment, and restrictive covenants. We can help you understand your rights, avoid disputes, and find practical solutions that make your projects work.

Contact our Property Disputes solicitors today

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