New Law Makes It Easier to Override Old Covenants on Victorian Properties

The Victorian Government has passed the Planning Amendment (Better Decisions Made Faster) Act 2026, which includes sweeping changes to how restrictive covenants are handled in the planning system. The Act received Royal Assent on 17 February 2026, though the covenant-related provisions are not expected to commence until 29 October 2027 at the earliest.

This is one of the most significant changes to Victorian planning law in decades, and it directly affects thousands of property owners across the state.

What Is Changing?

Under the current system, a planning authority must refuse a permit if it would breach a registered restrictive covenant. This has made it extremely difficult — and in many cases practically impossible — to develop covenant-restricted land, even where the development would otherwise comply with all planning controls.

The new Act changes this in two key ways. First, councils and the Minister for Planning will be able to grant planning permits that effectively override covenants, without requiring the covenant to be removed from the title first. The covenant remains registered, but it no longer blocks the planning approval.

Second, the Act removes the distinction between covenants created before and after 25 June 1991. Previously, pre-1991 covenants had much stronger protections under Section 60(5) of the Planning and Environment Act, which required consideration of any "detriment of any kind" to benefiting owners — a test that was nearly impossible to satisfy. All covenants will now be assessed under a single, unified framework.

What Does This Mean for Property Owners?

If you own land affected by a restrictive covenant that currently prevents development, the new law may open up opportunities that were previously blocked. Councils will assess permit applications based on planning policy objectives — state, regional, and local planning strategies — rather than the strict covenant protection tests that currently apply.

However, it is important to understand that covenants are not being abolished. They remain as private property rights that can still be enforced through the courts. What changes is that the planning system will no longer act as the gatekeeper for covenant enforcement. If a neighbour who benefits from a covenant on your land objects, they would need to pursue a private civil action rather than relying on the council to refuse the permit.

For property owners who benefit from existing covenants — for example, a single-dwelling covenant that protects the character of their street — this represents a significant shift. The cost and responsibility of enforcing that covenant now falls on the benefiting owner rather than the planning authority.

When Does It Take Effect?

The covenant provisions are not expected to commence before 29 October 2027, giving property owners and the industry time to prepare. The government may proclaim an earlier start date, but this has not been announced.

If you own property affected by a restrictive covenant — whether you want to develop or you benefit from one — it is worth seeking professional planning advice now to understand how these changes may affect you.

For more information, visit planning.vic.gov.au or contact us at info@townplanning.com.au.