Careful consideration must be given to the way in which car parking rights are structured in a residential development to avoid the risk of constraining future development on unbuilt parts of the site. Car parking is a valuable right, which is keenly protected by any property owner. There are several different ways that a right to park can be granted, for example, under a lease, by way of a licence or as an easement. Great legal uncertainty still surrounds the right to park in a designated space, which is surprising given how routinely they are granted and the significance and commercial value of such rights.

The right to park as an easement was explored in the recent case of Kettel and others v Bloomfold Ltd [2012] EWHC 1422 (Ch) where a developer had granted long leases of flats in a residential development and each flat had been granted the right to use a designated parking space on the estate. In each lease, the developer had reserved the usual right to develop other land on the estate, notwithstanding any diminishing of light or air or that it might "obstruct, affect or interfere with the amenity of or access to" the flats.

The developer's intention was to build on the common areas of the estate, which included the eight parking spaces that had been designated for the tenants' use. The developer had assumed that the wording of the lease allowing further development entitled it to relocate the tenants' parking spaces. The developer wrote to the tenants informing them that their parking spaces were to be relocated. The developer's contractors then fenced off the parking spaces, which the court subsequently viewed as "somewhat high-handed".

The first issue before the court was the nature of the tenants' right to park. The tenants' understanding was that their spaces had been demised to them like their flats under the terms of their leases, but the judge did not agree with this view. The individual tenants had not been granted exclusive use of a parking space, they had simply been granted a sole right to park. There was no exclusive possession. The right did not prevent the developer from doing anything it wanted with the parking spaces, save to the extent that it would be inconsistent with the tenants' ability to park in the spaces.

The court then considered whether the tenants' right to use their designated parking spaces were easements. An easement cannot exist where it leaves the landowner who granted the easement with no use or merely "illusory" use of the land. The court's view was that the tenants' right to park did not deprive the developer of all reasonable use of the land and as a consequence the developer's ownership of the land was not "illusory". As the judge pointed out, the developer "may pass on foot or by vehicle across the space freely if there is no vehicle parked on it". The developer "may choose to change or repair the surface …. or may lay pipes or other service media under it," and "may in principle build above it."

The developer asserted that the reservation allowing building on unbuilt parts of the estate gave it a right to move the designated parking spaces. The court disagreed, as since an express right was conferred to use the parking space, only clear language would provide that the right could be overridden. The language used in the lease did not meet this standard. Although an easement can be granted in terms which expressly or impliedly permit variation, there was no such right of variation here and no suggestion that such a right should be implied. The fact that the developer claimed that the new parking spaces would be equally convenient for the tenant was irrelevant. The court stated that the alleged "lack of inconvenience" to the landowner is not a reason to imply a right to change what has been granted to him. This would give open season to landowners to extinguish rights of way and replace them with a right over an equally convenient route.

The tenants were granted an injunction to prevent the relocation of their parking spaces. The judge also considered what level of damages might have been awarded if the injunction had not been granted. The judge suggested that the amount of damages awarded would be calculated on the"release fee" basis, meaning the sum which would have been negotiated between willing parties for the right to do what could not be done without the tenants consenting to it. This type of damages would be compensatory, by splitting the value generated by the development equally between the developer and the tenants after, interestingly, deducting 25% of the value as developer's profit. The judge estimated that such damages would be in the order of £517,000 to be divided between the eight tenants: a not inconsiderable sum.

The Law Commission has looked at the uncertainties surrounding car parking rights. It does not recommend a change to the existing law that rights granting exclusive possession cannot be easements. The Law Commission has, however, concluded that "an easement that stops short of exclusive possession, even if it deprives the owner of much of the use of his land, or indeed of all reasonable use of it, is valid". This allows an exclusive right to park to be an easement, provided that the landowner can gain access to the land, notwithstanding the extremely limited nature of such access.

Developers must take great care to ensure that any grant of a designated car parking space contains very clear language providing that the right can be overridden and an alternative car parking space designated in its place. As in the Kettel case, the courts place an emphasis on developers behaving in a neighbourly manner and with this greater awareness of the courts' willingness to protect parking rights, negotiated relocations are likely to prove expensive. Without carefully structured parking rights, a developer may find that its plans for further development are either seriously limited or thwarted altogether.