For decades, private agreements known as restrictive covenants have shaped the character of many Melbourne suburbs, often guaranteeing large blocks and low-density housing. Thousands of these covenants exist, frequently introduced by developers or struck between property owners to prevent subdivisions and second dwellings. However, these agreements—which in some cases can be set 50 or 100 years ago—are now at the centre of a fierce debate, accused of operating as “old-fashioned NIMBY planning laws” that obstruct the necessary supply of new homes.
The tension arises because these covenants, particularly those enforcing a single-dwelling use, clash with the urgent need to address the housing crisis and accommodate population growth. Town planning experts view the existing planning laws as being “hamstrung by private covenants” that do not speak to the current context.
Historically, landowners seeking to remove or vary a restrictive covenant have relied on an application to the Supreme Court of Victoria, which was not guaranteed of success.
A new planning policy being debated in state parliament is set to revolutionise this process. The proposed change would give both councils and the Victorian Civil and Administrative Tribunal (VCAT) the authority to overrule a covenant if the housing proposal aligns with the state government’s housing objectives, which include increasing supply, diversity, and affordability. Barristers predict that this shift could open up hundreds of thousands of single-dwelling properties to new housing, including dual occupancy, three lots, or more. By making it so covenants “won’t automatically block planning permits any more,” the government aims to simplify the process, bring Victoria into line with other states, and allow councils to focus on the planning merits of applications.