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Compulsory Acquisition Reform - significant changes due to commence in first half of 2017

NewsFlash 30 January 2017

Significant changes to the compulsory acquisition of land in New South Wales are due to commence in the first half of 2017. On 10 November 2016 the Land Acquisition (Just Terms Compensation) Amendment Act 2016 was passed by the NSW Parliament with the amendments to commence on proclamation. The principle changes include the following:

  • a 6 month pre-acquisition negotiation period;
  • an increase in the maximum relocation disadvantage payment to $75,000;
  • 3 months’ rent free occupation after acquisition;
  • strengthening the role of the Valuer General;
  • a first right of refusal to buy-back the land for 10 years after the acquisition.

The amendments strengthen the rights of landowners and increase the compensation payable. Acquiring authorities will need to take into account the amendments in planning compulsory acquisitions and undertaking the compulsory acquisition process. We advise in more detail the amendments as follows:

6 Month Negotiation Period

The acquiring authority must make a genuine attempt to acquire the land by agreement for at least 6 months before giving a proposed acquisition notice: section 10A. The period may be shortened by the Minister responsible for the acquiring authority but only with the concurrence of the Minister administering the Land Acquisition (Just Terms Compensation) Act 1991, currently the Minister for Finance, Services and Property.

The negotiation period does not apply to the acquisition of Crown Land, an easement under the surface for the construction or maintenance of works and a stratum under the surface for the construction of a tunnel.

Increased Compensation

The maximum amount payable to relocate a person’s principal place of residence has been increased from $26,710.00 to $75,000.00: section 60. This amount will be increased on 1 July each year in accordance with increases in the Consumer Price Index: Schedule 1A. The previous term of this amount “solatium” has been replaced by the phrase “disadvantage resulting from relocation”.

The market value of the land is to be adjusted where the land has a special value for a particular purpose for the landowner: section 56(3). Where the land is used for a “particular purpose” and there is no general market for land used for that purpose and the owner genuinely proposes to continue to use other land for that purpose then the market value is taken to be the reasonable cost to the owner of equivalent reinstatement in some other location.

Hardship Review

A landowner who has requested acquisition by an authority under the hardship provisions and has been refused may request the Secretary of the Department of Finance, Services and Innovation for a review of the decision. The Secretary will refer the decision to be reviewed by a ‘suitably qualified’ independent reviewer. The decision of the review is final and must be given effect to by the acquiring authority.

Post-Acquisition Occupation

Currently, rent can be charged by the acquiring authority from the date of acquisition until the former landowner vacates: section 34(3) and (4). A new sub-section 34(3A) provides that rent is not payable during the 3 month period after acquisition where the property is the landowner's principal place of residence.

Strengthening the role of the Valuer General

A number of minor amendments have given the Valuer General a more independent role. These may be summarised as follows:

  • Claims for compensation can be lodged with the Valuer General: section 39(1).
  • The acquiring authority must provide the Valuer General with a list of issues that the authority believes are relevant to the determination of the amount of compensation: section 41(1).
  • The Valuer General is to provide a copy of the determination of the amount of compensation to the landowner as well as the acquiring authority: section 41(3).
  • The period for the determination is increased from 30 days to 45 days. The period may be extended by the Minister administering the Act: section 42.

Land not required for acquired purpose

Where during the period of 10 years after the acquisition the acquiring authority proposes to dispose of land because it is no longer required for the public purpose for which it was acquired, then the acquiring authority must first offer the land for sale to the former owner at the market value of the land at the time the offer is made: section 71(A). 

This offer is not required where the authority has made substantial improvements to the land, whether the land is prepared to be disposed to another authority for a public purpose.

Conclusion

The amendments require acquiring authorities to review their time frame for compulsory acquisition of land and a consequential extension of the time frames for the relevant project. It will also require a review of the acquisition process to ensure the procedural amendments arising from the new Act are followed.

For landowners, the new Act gives greater time for negotiations, additional rights for compensation and an ability to deal directly with the Valuer General. In addition, there is a potential right to re-purchase for 10 years after the acquisition.


Christopher Conolly, Partner
Sydney

Gary Newton, Partner
Sydney

NewsFlash 30 January 2017
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