Restrictive Covenants on Property — What They Mean for Buyers (Australia 2026)
A restrictive covenant is a registered obligation that limits how a property can be used or developed. It is attached to the title and is binding on every future owner — regardless of whether they knew about it when they purchased.
What Is a Restrictive Covenant?
A restrictive covenant is created when a previous owner (often the original developer of land) places a written restriction on the land at the time of subdivision or sale. It typically benefits an adjoining lot or a class of properties within an estate.
Unlike zoning laws (which are imposed by government), restrictive covenants are private legal agreements between parties. They remain enforceable by the benefiting party even if the original parties to the agreement are long gone.
Common Examples of Restrictive Covenants in Australia
| Covenant | What it restricts |
|---|---|
| Materials restriction | “Only brick, stone, or rendered masonry may be used for external walls — no metal or fibrous cement cladding” |
| Minimum floor area | “No dwelling smaller than 150 square metres of living area may be erected” |
| Single dwelling only | “Only one residential dwelling may be erected on the lot — no subdivision or dual occupancy” |
| No commercial use | “The land shall be used for residential purposes only” |
| Design restrictions | Colour restrictions, roof material restrictions, fence height |
| Building setbacks | Minimum distance from boundary beyond what the planning scheme requires |
| No outbuildings | Restrictions on sheds, garages, or secondary structures |
These are most common in:
- New estates (2000s–present) — developers use covenants to maintain character and value
- Inner suburban heritage areas — historical covenants from 1950s–1980s subdivisions
- Rural residential areas — restrictions on livestock, fencing, use
How Covenants Are Identified
Restrictive covenants are identified through a title search — they appear in the “encumbrances” section of the certificate of title or the title register search. The title search usually refers to the document (e.g., “Covenant in DP [number]”) — the actual covenant terms are in the Deposited Plan or a separate instrument.
Your conveyancer will:
- Identify covenants noted on title
- Obtain the full covenant document
- Advise on the specific restrictions
Can a Restrictive Covenant Be Removed or Modified?
Yes — but it is not simple. Options include:
1. Agreement with the benefiting party If the covenant benefits a specific adjoining lot owner, you can negotiate with them to release it. This typically involves compensation and legal costs for both sides.
2. Court application In most states, you can apply to the court to have a covenant modified or extinguished. Courts apply tests including:
Whether the covenant has become obsolete (neighbourhood has changed significantly)
Whether the benefiting party will suffer any real harm from modification
Whether the public interest supports the modification
NSW: Land and Environment Court
VIC: VCAT or Supreme Court
QLD: Supreme Court or Planning and Environment Court
3. Covenant lapsing due to passage of time In some limited circumstances, covenants may become unenforceable over time (particularly old covenants from the early 20th century). This requires legal advice — do not assume an old covenant is unenforceable.
Cost: Removing a restrictive covenant through court proceedings can cost $5,000–$30,000+ in legal fees. Success is not guaranteed.
Implications for Buying a Property With a Covenant
Before buying:
- Confirm you understand all restrictions and they do not conflict with your plans for the property
- If you are planning an extension, granny flat, or subdivision — a covenant prohibiting dual occupancy or subdivision can be fatal to those plans
- If the covenant conflicts with your renovation or development intent, do not assume it will be removed easily
Breach of covenant: If you breach a restrictive covenant (e.g., build a dual occupancy on a covenant-restricted lot), the benefiting party can seek:
- An injunction (court order to stop or undo the work)
- Damages
- In some cases, council may also become involved if the covenant is referenced in the planning scheme
Restrictive Covenants vs Zoning
These are separate layers of control:
| Restrictive covenant | Zoning (council) | |
|---|---|---|
| Created by | Private parties (original developer, owner) | Government (council, state) |
| Enforced by | Benefiting party (private action) | Council or state (public regulatory action) |
| Can be changed by | Agreement of parties or court | Council rezoning |
| Applies to | Specific lot(s) | Land zone area |
Important: Getting council approval for something does not override a restrictive covenant. You may have a DA approval to build a secondary dwelling — but if the title carries a covenant prohibiting it, the covenant still binds you, even with council permission.
Frequently Asked Questions
The covenant is from 1962. Does it still apply?
Possibly — age alone does not extinguish a covenant. However, very old covenants may be less enforceable if: (a) the benefiting party no longer exists; (b) the neighbourhood has changed so dramatically that the purpose of the covenant is obsolete; or (c) the covenant was not properly drafted. Legal advice is required to determine enforceability.
I want to build a granny flat on an estate property with a “single dwelling” covenant. What can I do?
This requires legal advice specific to the covenant wording, the benefiting party, and the state. Some “single dwelling” covenants apply to the primary structure only — a granny flat may or may not be caught depending on drafting. Do not proceed without legal clearance.
Does the mortgage lender care about covenants?
Lenders are primarily concerned with their security value. A restrictive covenant limiting development potential may affect value — particularly if the covenant prevents the property from being developed to its highest use. In most standard residential cases, covenants do not affect lending.
Related Due Diligence Guides
- Easements and Covenants — What Property Buyers Need to Know
- Title Search Australia — What It Is and How to Do It
- Zoning Laws for Property Buyers — What the Zones Mean
- Property Due Diligence Hub
This article provides general information about restrictive covenants on Australian property. The enforceability of specific covenants requires legal advice. Engage a licensed conveyancer or solicitor before buying. Find one through MoneySmart.