What Are Building Covenants — And Why Do They Actually Matter?

Serah-Anne
May 11
3 min read

Updated: May 11

What Are Building Covenants — And Why Do They Actually Matter When You're Buying a Section?

If you're looking at buying a section in a new subdivision in New Zealand, you'll almost certainly come across the word covenant. It sounds legal and complicated. But it's actually one of the most important things protecting your investment — and your neighbourhood — long term.

Here's a plain-English guide to what building covenants are, what they typically cover, and why they exist.

What Is a Building Covenant?

A building covenant is a set of legally binding rules registered against the title of a section. They control things like what you can and can't build, what materials you use, and how the property needs to be maintained. According to Duncan Cotterill's guide on land covenants, covenants are registered in perpetuity in most cases — meaning they apply to every future owner, not just you.

They're standard in quality subdivisions across New Zealand and exist for one main reason: to protect everyone who buys there.

What Do Building Covenants Typically Cover?

Every subdivision has its own covenant, but most will include rules around:

Minimum floor area — e.g. houses must be at least 120m² or 150m². This prevents someone building a tiny relocatable house next to your brand-new home.
Materials and finish — external cladding, roofing materials, and colour palettes. Keeps the streetscape looking cohesive.
Fencing — type, height, and style. Often rural-style or specific materials to maintain a consistent look.
Setbacks — minimum distances from boundaries. Protects views and prevents overcrowding.
No relocated or transportable buildings — this is a big one. Prevents second-hand buildings being moved onto sections.
Landscaping timeframes — you may need to complete landscaping within 12 months of building.
No commercial activity — keeps the subdivision residential.
Maintenance standards — properties must be kept tidy and presentable.

Why Should You Care About Covenants?

Covenants get a bad rap sometimes — people see them as restrictions. But think about it from the other side:

Without covenants, your neighbour could build a corrugated iron shed, park three broken-down cars on the lawn, and run a welding business from their garage.
Covenants protect your property value. When every home in a subdivision meets a quality standard, the whole area benefits.
They create certainty. You know what you're buying into — and so does everyone else.

As the Duncan Cotterill guide notes, covenants serve purposes ranging from preserving the aesthetic appeal of a neighbourhood to ensuring compliance with specific building standards. They're a feature, not a bug.

What Happens If Someone Breaks a Covenant?

Covenants are legally enforceable. If a property owner breaches one, any other lot owner (or the developer) can take action through the courts to enforce it. This can include requiring the breach to be remedied, or seeking compensation.

In practice, most covenant breaches are sorted out informally — often a conversation is all it takes. But the legal teeth are there if needed.

Are Covenants the Same as Council Rules?

No. Covenants sit alongside — but are separate from — your local council's District Plan rules. You need to comply with both.

For example, your council might allow a 1.8m fence, but your covenant might limit fences to 1.2m. In that case, the covenant is the stricter rule, and it's the one that applies.

Always check both the covenant and the District Plan before designing your build. Your architect or designer should do this as standard.

What About at Kotare Estate?

At Kotare Estate in Hawera, design guidelines exist to maintain the quality and character of the development. All sections are 100% freehold — so you own your land outright — but the covenants ensure the estate stays premium. That's exactly what you'd want from a gated community: the security of ownership with the assurance that your investment is protected.

The Bottom Line

Building covenants aren't something to be wary of — they're something to look for. A subdivision without covenants is a subdivision where anything goes. And if you're investing in a home you plan to live in for 10, 20, 30 years — or that you want to hold its value — covenants are one of the best protections you've got.

Thinking About Buying a Section?

Kotare Estate is Hawera's only gated freehold subdivision — with design guidelines that protect your investment and your lifestyle. View available sections →