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The words ‘compulsory acquisition’ sends shivers down the spine of any property owner that loves their home. A good understanding of how compulsory land acquisition works in New South Wales will help take the mystery and fear out of the process.
Compulsory acquisition, sometimes referred to as ‘resumption’, is the process where the Government purchases privately owned land for public purposes. It is most commonly done for the expansion of infrastructure like roads and public transport.
As the name suggests, it is compulsory and the owner’s interest in selling their land is irrelevant.
The Land Acquisition (Just Terms Compensation) Act 1991 sets out how the process should happen and how compensation should be managed. (https://www.legislation.nsw.gov.au/#/view/act/1991/22)
Before the compulsory acquisition process begins, the acquiring authority will attempt to come to an agreement with the landowner to acquire the land. To do this they will contact you, meet with you and have an independent valuer inspect your property to determine its value. They then send an offer and negotiations may commence. If the offer is not accepted, the landowner is able to contract their own valuer (at the acquiring authorities cost) to value the property and negotiate on their behalf.
If an agreement cannot be reached, the Government may then decide to compulsorily acquire the property. In that case you will receive a Proposed Acquisition Notice (PAN) and the property will be gazetted (meaning a post goes in the NSW Gazette identifying the NSW Governor has approved the acquisition).
The PAN notice will detail:
Pre-existing negotiations can continue after the PAN is issued. If those negotiations fail, the compulsory acquisition will still take place on the listed date and the Valuer General will become involved. The Valuer General is an appointed official who’s responsibility is to assess the situation and come to a fair decision of the lands value. (For more see: https://www.valuergeneral.nsw.gov.au/about_us/what_we_do)
In specific circumstances, if you are residing on the property being acquired you could continue living there for an agreed period of time at current market rent.
Compensation for the land is based on the principle of ‘just terms’, aiming to compensate property owners fairly.
As mentioned previously, the acquiring authority will usually make a genuine attempt to acquire the property by means of a private agreement for at least 6 months from the date of the initial notification of the acquisition. This time is intended to enable the land owner to understand the process, have any questions and concerns addressed and consider options.
If an agreement for compensation cannot be reached within the 6 month negotiation period, the compulsory acquisition process listed above will commence. Then the compensation for the acquisition of the interest in the land will be determined by the valuer general in accordance with the Act.
In the initial stage of the proposed acquisition, the public authority will need to undertake a valuation and detailed assessment of the property, in which case an independent qualified valuer will be appointed and if required other relevant experts to inspect the property and determine its value. Following the preparation of these reports the acquiring authority will provide the land owner with an offer of compensation to acquire the interest in the land.
The acquiring authority generally encourages the land owner to engage their own independent valuer, other experts (if applicable) and legal representative to obtain independent advice with respect to the interest in land when considering the compensation offer.
Legal costs and valuation fees reasonably incurred in connection with the compulsory acquisition of the interest in the land will form part of the compensation to the landowner, determined in accordance with section 55 of the Act.
The land owners engagement of a valuer should be on the following basis:
The valuer must be a qualified valuer, meaning that the valuer;
a) has membership with the Australian Valuers Institute (other than an associate or student membership); or
b) has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer; or
c) has membership of the Royal Institution of Charted Surveyors as a charted valuer;
For more information and further reading on compulsory acquisition – check out these websites: