Heritage Covenants and Land Value: What Every BC Owner Needs to Know

Why this matters:

In British Columbia, zoning often gets the spotlight when people talk about property value. But zoning is only one layer of the story. Heritage covenants legal agreements registered on title can quietly reshape what land is worth, sometimes more than zoning itself.

A real-world case in Cumberland:

We were recently engaged to value land in the Village of Cumberland. On paper, it looked straightforward: estimate the land value. But the site included a 1920's built -the last surviving home from a Japanese settlement from the turn of the century and the Village planned to register a heritage covenant on title.

The covenant required the owner to:

• Preserve and maintain the existing house.

• Avoid subdivision or new construction.

• Prevent demolition, relocation, or major alterations.

In effect, the covenant froze the site in its current state. What zoning once allowed no longer mattered.

What a heritage covenant is:

Under Section 219 of the Land Title Act, municipalities and heritage organizations can register covenants that “run with the land” indefinitely. They often restrict demolition, block new development, and impose obligations for upkeep. Once registered, they are binding on all future owners.

How this affects highest and best use:

Appraisers test every property against four filters of highest and best use: physical possibility, legal permissibility, financial feasibility, and maximum productivity. Heritage covenants go straight to the legal filter. Even if zoning permits redevelopment, the covenant can erase those options.

In the Cumberland case, that meant the only permissible use was to keep and maintain the existing home. The highest and best use shifted from potential redevelopment to simple preservation.

Market evidence and value impacts:

The market shows a wide range of outcomes depending on the degree of impact on the utility of the property:

• Minor restrictions → little to no impact.

• Loss of subdivision potential → more significant impact.

• Severe restrictions (no new construction, full preservation) → significant to severe impact on value.

The Cumberland property leaned toward the severe side. Virtually all development rights were gone.

How appraisers measure the impact:

When direct comparable sales are rare, appraisers rely on:

1. Before-and-after analysis: value with and without the covenant.

2. Buyer perception: obligations for maintenance and preservation reduce willingness to pay.

3. Case evidence: legal decisions and market precedents where similar covenants applied.

The bigger takeaway:

Heritage covenants don’t create a simple, one-size-fits-all discount. They reshape property rights, and their impact depends on what’s removed, what condition the building is in, and how the market values history versus flexibility.

In Cumberland, the covenant preserved a piece of local history but it also redefined the land’s value.

For BC owners, buyers, and municipalities, the lesson is clear: if a heritage covenant is on title, valuation starts with what’s been taken off the table.