• VCAT

May 8, 2024

What we like and dislike about removing a restrictive covenant via a planning permit.

Landowners burdened by a restrictive covenant often want to remove it to maximise the potential of their land. This article describes the process, risks and includes two case studies of successful applications as well as tips you can follow to achieve a successful outcome.

A successful application can unlock the development potential of a site in a relatively inexpensive way. However, the process of removing a restrictive covenant via a planning permit is best described as risky. Not all proposals carry the same level of risk of failure, but usually covenant related applications carry a higher level of risk than standard planning applications.

The reason these applications are described as risky is because of the role of covenant beneficiaries. These are the property owners that enjoy the benefit of the covenant. These parties are identified on the title documents when the covenant is created and can object to any proposed removal of the covenant. Objections by these parties are held in higher regard than normal objectors because of the additional rights afforded to beneficiaries under the 1987 Planning and Environment Act. These additional rights typically result in council refusing the application to vary the covenant if any of the beneficiaries object.

Before exploring the pros and cons of making an application, some background information:

What is a covenant?

It is a legal contract of agreement created by a landowner that establishes a restriction prohibiting or allowing specific actions to be taken on a site. Once the restriction is created it runs in perpetuity with the land unless it is formally removed or has a specific date of expiry also known as a sunset clause.

Why are they created?

They are created at the discretion of current landowners to avoid specific outcomes on the land by future purchasers. In modern times the most common use of covenants or restrictions are land developers of new housing estates. The creators of these estates will typically have a design guide aimed at creating a homogenous estate. These guides specify minimum setbacks, heights, building finishes and the like that apply to all lots. The purchasers of the new lots are bound to the design guide via a restriction or covenant.

What are the most common types of covenants?

Single dwelling covenants are commonplace, along with covenants specifying building materials, front fences heights or other specific outcomes. There are also covenants related to restricting specific use and development outcomes such as quarrying or excavation on a site.

How can you remove a covenant from your land?

A covenant can be removed from a deed of title by an order of the supreme court or a council issued planning permit. We will be focusing on the planning permit process for the purposes of this article.

Why are covenants difficult to remove?

They are considered legal contracts and were created by the original landowner to run in perpetuity with the land. Despite the fact some covenants are old and often seem superfluous, they remain legally binding agreements and hence there is a considerably high bar to their removal or variation.

Two case studies of successful approvals

A successful approval looks like a standard planning permit with few conditions attached per the image below we achieved from Glen Eira Council in 2024:

This case was a variation to a covenant created in 1955 that specified only brick construction was permitted in the upper levels of development. This is a prohibitively expensive method of construction and we sought to remove the requirement. Despite there being more than 250 beneficiaries, no objections to the proposal were received and the application was approved. Further on, we set out the tips in this article of how we set this application up for success.

This second case study was a single dwelling covenant removal in the City of Hume issued in 2017.

The photographs below show the site before and after dual occupancy and subdivision.

The pros and the cons of the permit process

As mentioned in the opening section, the main benefit of making an application to vary a covenant is the development potential it unlocks. This can be as major as creating an opportunity to develop multiple units on a site or as minor as changing the allowable finished building materials of a development.

Another major benefit of making an application for a council permit is that it is inexpensive compared to engaging in the supreme court process. You also have the added benefit of reserving the right to apply through the courts if you fail through the council planning permit process.

The largest downside of making an application is the likelihood of objections by the beneficiaries, which in turn will lead to a failure of the application. Receipt of objections is out of our control as the applicant. You can negotiate with beneficiaries to withdraw their objections but the success of these negotiations varies greatly depending on the perspective of the objecting beneficiaries.

As another downside, the court option provides more certainty (not guaranteed) of success than the planning permit process. The court enjoys a greater level of discretion than the local council to determine if the covenant can be varied based on legal tests.

Tips for success

  • Applications to remove a covenant entirely are more like to fail than applications to vary a covenant. Look for changes to the wording of the covenant that would allow you to complete the development you want while retaining an altered version of the covenant on the site.
  • The application is more likely to be successful if it is tied to a specific outcome. It is best to lodge plans depicting the future development on the land as the basis for your application to make changes to the covenant. This creates greater peace of mind for beneficiaries than a proposal that seeks to change the covenant without providing reasons or a rationale.
  • Identify the number of beneficiaries of the covenant as early as possible. The higher the number of beneficiaries, the more likely objections from one or more will be received and the less likely a successful outcome will follow.

For more information on how to identify covenant beneficiaries please contact our office for a discussion with a professional town planner.