Restrictive covenant on Contract

Hi guys,

We've found a property in Western Sydney which is a house + approved granny that we're quite interested in.

After reviewing the contract of sale, I have discovered that it has a restrictive covenant (screenshot attached) that permits only one main dwelling to be built on the lot with >300 lots the beneficiary of the covenant. I had no intentions to duplex the property seeing as it's already enjoying $800/wk in rental income across the main residence + granny AND the main residence + granny are in excellent condition (according to the pest & building).

This covenant makes me now re-consider what the correct underlying value of the property is and what I thought it was worth. Presumably any potential growth in the land value is hampered by this restrictive covenant.

I'm planning to engage a property lawyer next week to review this formally but coming to this very helpful forum in advance for hopefully some initial suggestions/discussion:

• This covenant appears to be from 1955 so I can understand at the time why there would be restrictions on trying to prevent people building a bunch of units in the area
• Some initial research has suggested that the path forward is to try to vary the covenant to allow construction of two dwellings rather than trying to get it removed in its entirety which is less likely to spook the beneficiaries of the covenant
• HOWEVER, there are >300 lot owners we would be at the mercy of and surely there would be one nimby would would want to object to it (and realistically a lot more)
  
• At the same time, I can see that allowing the covenant to be varied would be beneficial for the other lot owners since it means they would also potentially be able to duplex their property and add value that way

Given it's a public holiday on Monday, I would like to do some initial research myself before I consult with a property lawyer. Some questions/thoughts:

• Has anyone dealt with a covenant as extreme as this? How much time and $$$ did it cost you?
• Presumably the other lot owners have a similar restrictive covenant placed on their properties of which I would be a beneficiary. Is there a simple way I can check if anyone else nearby has managed to vary or remove such a covenant? In a scenario where I would want this covenant varied, I imagine some precedent may be helpful in applying to the council.
• Is this a headache I should stay clear of? Or, am I jumping at ghosts?

Cheers

 

Apologies, not s32, referring to a restrictive covenant on the title. Spent too long reading about something else and I've confused myself! Still getting the hang of all the jargon and terminology. Sorry!!

 

For many ppor owners the covenant would be a plus. No likelihood of 3 or 4 pack developments right to the boundary surrounding them and destroying their suburban idyll.

 

Which council area is the property located in? Most Local Environmental Plans (LEP's) contain a provision that suspends the operation of covenants such as this where the relevant planning provisions (ie LEP or DCP -Development Control Plan) permit the development intended to be prohibited by the covenant.

 

Good point, I didn't consider it that way. Thanks.

Interesting, thanks. It's located in Blacktown.

 

Many consent authorities wish to maintain ultimate control over development concerns without being hindered by private covenants. They are able to do so by virtue of Section 3.16(2) of the Environmental Planning and Assessment Act 1979 (NSW).

The policies do vary from council to council and will not apply to all covenants. Reg 1.9A Blacktown LEP does contain the relevant provision.

BLACKTOWN LOCAL ENVIRONMENTAL PLAN 2015 - REG 1.9A Suspension of covenants, agreements and instruments