In Melbourne’s ever-expanding suburbs, thousands of homeowners face a hidden legal obstacle that can derail redevelopment ambitions before a single plan is drawn. It’s not a zoning overlay or council policy—it’s a restrictive covenant, typically containing a deceptively simple phrase: “single dwelling only.” These private land-use restrictions, often registered decades ago, can thwart even the most modest subdivision proposals, locking in outdated development patterns at odds with today’s housing needs.
The Kumar Family’s Case: A Modern Struggle with a Historic Legal Barrier
The recent experience of the Venkatesh Kumar family in Pakenham puts this issue into sharp focus. Hoping to subdivide their block to build a modest home for their 22-year-old son, they expected to face the usual planning hurdles. Instead, they found their application promptly rejected by Cardinia Shire Council, not because of planning scheme non-compliance, but due to a restrictive covenant registered on the title since 2010.
Despite spending $15,000 on their proposal, councillors voted unanimously against it in under ten minutes. They cited the covenant as giving decisive weight to objections that would otherwise be insufficient for refusal. This outcome exemplifies how restrictive covenants—legal relics in many respects—continue to exert binding force on modern land use.
A Legacy from 1918: The Statutory and Common Law Roots
To understand this enduring legal rigidity, we must go back over a century. The current legislative framework for restrictive covenants is rooted in Section 84 of the Property Law Act 1958 (Vic), a provision largely unchanged since its original drafting in 1918. Its longevity has entrenched a private land-rights regime ill-equipped for today’s challenges.
The legal lineage stretches further back to Tulk v Moxhay (1848), a seminal English case that confirmed certain obligations could “run with the land” and bind future purchasers. Victoria’s adoption of these principles was strengthened by the Transfer of Land Act 1958, particularly Section 88, which provides for the recording of covenants on the title register. While this recording ensures enforceability, it also fosters a sense of permanence, even where the original purpose for the restriction has long since faded.
Covenants in the Planning System: A Quasi-Regulatory Effect
Although restrictive covenants are private obligations, they intersect awkwardly with public planning systems. The Planning and Environment Act 1987, under Section 61(4), prevents councils from issuing planning permits for developments that would breach a registered covenant unless the covenant is first varied or removed. This effectively gives restrictive covenants a quasi-planning status—able to override even sound, policy-supported proposals aimed at increasing housing supply.
What’s more, the Supreme Court remains the primary forum for modification or discharge under Section 84 of the Property Law Act. While theoretically accessible, the process is costly and uncertain. Most homeowners cannot afford litigation, and the Court’s focus tends to be on whether affected beneficiaries consent or are materially prejudiced—public benefit is not the legal test.
Why “Single Dwelling” Covenants Are Especially Problematic
Among the most pervasive and problematic covenants are those limiting development to a single dwelling per lot. Common in post-war subdivisions, these covenants may appear benign, but their effect is profound: they prevent even low-impact forms of “gentle density,” such as duplexes or backyard units.
The language varies—some refer to “one dwelling only,” others prohibit “more than one house”—but the effect is consistent. They block subdivision and redevelopment, even where planning policies and neighbourhood character would otherwise support such change.
In many municipalities, particularly Melbourne’s growth corridors, this results in large, underutilised lots locked out of contributing to housing supply. In established suburbs, it protects a privileged form of exclusivity that runs counter to affordability goals and demographic change.
A Call for Reform: Legislative Options and Policy Considerations
Legal scholars and property lawyers have long called for reform. One proposal is to amend the Planning and Environment Act or Subdivision Act to allow local councils or planning panels to consider covenant removal as part of the planning permit process, particularly for outdated or low-impact restrictions.
Another pathway is through legislative reform of Section 84, potentially introducing a streamlined, lower-cost application process where public policy benefits—such as affordable or family housing—can be considered as grounds for discharge.
There is also scope to reconsider the requirement for consent from all beneficiaries, especially where the covenant is functionally obsolete or broadly applied in a way that frustrates orderly planning.
Conclusion: Time to Rebalance Private Rights and Public Needs
The restrictive covenant system was designed to protect private landowners’ interests in a bygone era. Today, it operates in tension with urgent public imperatives—chief among them, the need for diverse and affordable housing in well-serviced urban areas.
As the Kumar family’s experience shows, the stakes are not merely legal—they’re social, economic, and intergenerational. Without reform, Victoria’s housing strategy will continue to be hamstrung by private instruments that no longer serve the public good.
Addendum
Exempt small second dwellings
It was good to read The Age’s report on how the law in relation to restrictive covenants might be reformed to provide additional housing. However, I should clarify, my suggestion for reform is not to remove the operation of single dwelling covenants on all land across Victoria; the Supreme Court is particularly efficient at dealing with applications to modify and remove restrictive covenants. It is to exempt small second dwellings on a lot from the operation of single dwelling covenants. These are dwellings 60 square metres or less with a kitchen, bathroom and toilet, located on the same lot as an existing home. It seems to me that the impact on the amenity of beneficiaries from this change will be more than offset by the community benefit of improved housing supply.
Presently, the planning permit process is largely intended to amend or remove non-controversial covenants, whereas the Supreme Court process can be too expensive for such a minor modification. There can’t be much said in opposition to modifying single dwelling covenants to allow a small second dwelling on many lots across the city, but presently there is no cost-effective means of achieving this in the face of opposition from beneficiaries.
Matthew Townsend, barrister, Melbourne 11 May 2025 The Age