Developers use covenants in their property contracts so that the quality of the buildings constructed in the development reach a certain standard and by having a set standard the value of the properties in the area will be maintained. Generally everybody benefits from this type of protection, the developer, home owners and investors alike.
A ‘covenant’ in relation to property contracts is typically used between a buyer and a seller/developer. The use of a convenant in a contract has two different purposes:
- a covenant where there is a requirement or commitment on the part of the buyer and an example of this could be where a developer requires the buyer to build on a piece of land within a certain period of time and build a certain size house and with certain building materials, etc.
- a second use of a covenant may be where it details ‘how an owner may use a property’. For example in a high rise apartment block unit holders may not be able to hang laundry on the balcony and they may not be able to have BBQs on the balcony
When purchasing property with a covenant do make sure that they are able to be met and that they will not hinder a sale at a later stage.
On 1 January 2010, the Queensland Government made some changes to the rules relating to new and existing covenants in an effort to make housing more affordable and more sustainable.
There were many reasons for the change and one of the purposes behind the changes was to allow home owners to install items that would allow for a greener style of home. Many existing covenants did not allow for items such as water tanks, solar power panels on roofs and even were so strict that owners had to build their house facing the wrong way and could not get the environmental benefit of a north facing house.
The changes to the rules allows for a much more sustainable building to be constructed in new areas. In the long term everyone will benefit because sustainable living is becoming more and more desirable.