If you are looking to purchase a property in a development, make sure you keep an eye out for covenant agreements. Otherwise, your property might take a value hit come selling time.
Developer QM Properties is warning property buyers to make sure a covenant agreement is part of their contract when purchasing into a development.
A covenant agreement locks down the external qualities of a property, such as paint colour and air conditioning unit placement.
Carolyn Schofield, QM Properties manager, said a covenant agreement can make sure buyers would be able to retain their value in the long-term, which would help prevent next-door neighbours creating eyesores and reducing the value of your property as a result.
“Some buyers view a new estate and think ‘Yes it looks great now, but what will the character of the neighbourhood look like in 10 or 20 years?’,” Ms Schofield said.
“Covenant agreements guarantee the design quality and character of communities, safeguarding residents from value depreciation and helping ensure that homes increase in value and deliver improved yields.
“Buyers can breathe a little easier knowing that they won’t end up with a little tin shed next door which would bring down the value of their house.”
Because buyers in a development are purchasing a house in a planned community, Ms Schofield said buyers need to keep in mind that all the properties in development will be of a similar standard.
“The covenant ensures that properties within an estate will all be of a similar standard. When a buyer invests time, money and effort into building their dream home, the last thing they want is to see their neighbour building a type of house that will devalue their property,” she said.
“But beyond those considerations, buyers are are buying into a community, and they want to know that that community will last beyond the end of the developer’s involvement.
“Covenants are that agreement to preserve the community they have bought into.”
Covenant agreements only relate to the external features of the property, so, as Ms Schofield adds, “if you want bright red internal walls and a bath in the shape of a swan then go for it”.