The Victorian Government has released the Planning Amendment (Better Decisions Made Faster) Bill 2025.

The proposed changes contain two significant changes to the regulation of restrictive covenants in Victoria.

FIRST, it is proposed that planning policy can be considered in the decision to remove or vary a restrictive covenant. The new section 60(2) will provide:

“Before deciding on a type 2 or 3 application which would allow the removal or variation of a restriction (within the meaning of the Subdivision Act 1988), the responsible authority must also consider the following—
(a) the impact of removing or varying the restriction on the material interests of the owner of any land benefited by the restriction (other than an owner who, before or after the making of the application for the permit but not more than 3 months before its making, has consented in writing to the grant of the
permit) in terms of—
(i) loss of amenity; and
(ii) loss arising from change of character to the neighbourhood; and
(iii) any other material detriment, other than financial loss, that may be suffered;
(b) the impact of the restriction on the ability to deliver—
(i) the objectives of planning in Victoria; and
(ii) any applicable State planning strategy, regional planning strategy or planning strategy for the area covered by the planning scheme; and
(iii) the objectives or purposes of the planning scheme;
(c) whether a matter that is the subject of the restriction to be removed or varied is also regulated by the planning scheme;
(d) if the removal or variation of the restriction is proposed in conjunction with an application for a permit for a use or development that would breach the restriction, for the purpose of considering a matter under paragraph (a), (b) or (c), whether that use or development is acceptable having regard to the matters set out in subsections (1), (1AA), (1A) and (1B) 15 (if relevant).“

The current wording of section 60(2) requires that the impacts on beneficiaries be resolved before planning policy can be considered. As Senior Member Wright QC explained in Waterfront Place Pty Ltd v Port Phillip CC [2014] VCAT 1558: “72. The Tribunal stated that in applying the tests set out in s. 60(2) it is not a question of balancing the loss suffered by a benefiting owner in each of the categories set out in paragraphs (a) to (d) against the planning benefits of removal or variation of the covenant. The tests must be applied in absolute terms. Consideration of the planning merits can occur only if the tests are satisfied and the discretion to grant a permit thereby enlivened. This Tribunal respectfully agrees.”

Section 60(5) is also proposed to be repealed. The existing section 60(5) of the Planning and Environment Act 1987 has been described as “a high barrier that prevents a large proportion of proposals”:

“(5) The responsible authority must not grant a permit which allows the removal or variation of a restriction referred to in subsection (4) unless it is satisfied that—
(a) the owner of any land benefited by the restriction (other than an owner who, before or after the making of the application for the permit but not more than three months before its making, has consented in writing to the grant of the permit) will be unlikely to suffer any detriment of any kind (including any perceived detriment) as a consequence of the removal or variation of the restriction; and
(b) if that owner has objected to the grant of the permit, the objection is vexatious or not made in good faith.“

Without any exaggeration, this provision means that someone could argue that the proposed modification or discharge of a covenant would make the beneficiaries’ curtains fade, and the decision maker would have to refuse the application. It has never been clear why this incredibly strict standard applies to pre-1991 covenants and a less strict standard applies to post 1991 covenants. In any event, this distinction is proposed to be brought to an end in the new Bill, as all covenants are proposed to be covered by the new s60(2), above.

SECOND, the Minister or responsible authority would be able to grant a planning permit that will breach a restrictive covenant. This removes a considerable burden from local councils that presently need to regularly seek legal advice on the proper construction of covenants to avoid granting a permit that may breach a restrictive covenant. As one senior government lawyer explained: “Councils are presently the gate keepers and arbiters of the private property law system. It’s incredibly unfair and generates an inordinate amount of work.”

But the covenants themselves will remain fully enforceable until they are removed or varied. This may lead to an increase in the number of injunction applications as people try to act on a planning permit and simply wait for one or more beneficiaries to stop them. The risks in doing so are high.

Prior to 2000, planning permits could be granted that would permit a breach of a restrictive covenant. For instance, in Luxury Developments v Banyule CC [1998] VCAT 1310 the Tribunal explained that its remit was exclusively the application of town planning controls and policies. It had no jurisdiction to consider the proprietary legal interests raised by the existence of a restrictive covenant. However, after the permit was granted and construction commenced, the residents of the Hartland Estate in Ivanhoe sought and were granted an injunction in the Supreme Court of Victoria to stop the development.

Luxury Developments subsequently went into liquidation, leaving the residents of the Hartlands Estate unable to recover their costs. Partly in response to this case, the Victorian Parliament passed the Planning and Environment (Restrictive Covenants) Act 2000, an Act that would prevent planning permits from being issued where they would breach a restrictive covenant. The proposed amendment will reverse the effect of that change to the Planning and Environment Act 1987.

IN CONCLUSION, the Supreme Court process may remain the preferred choice of jurisdiction for a number of restrictive covenant applications, such as: uncontroversial applications; applications for declarations; and applications not supported by state policy (such as an application to increase the height or number of storeys of a single dwelling)–appreciating that the Supreme Court tends to be much faster and ultimately less expensive than VCAT (and one that doesn’t ordinarily involve council planners or solicitors).

But for ambitious changes to restrictive covenants where multiple dwellings are proposed over the objections of beneficiaries, it may be that the new process creates a regulatory framework in which planning policy is given significant weight in a decision to amend or discharge a restrictive covenant. An example of this might be land along Wattletree Road in Malvern, where policy supports more intensive forms of development but development is constrained by the presence of numerous single dwelling covenants. Presently, an application for planning permit for a medium density housing would likely fail if it was opposed by beneficiaries of the single dwelling covenants, but subject to satisyfing questions of neighbourhood character, that may be about to change.

The new laws may not come into effect until 2028, assuming they pass both houses of the Victorian Parliament without significant amendments.

A more detailed analysis of the Bill can be found here in the consolidated notes, under ‘Attempts at Reform’.

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[1]              Fitt & Anor v Luxury Development Pty Ltd [2000] VSC 258.