1. What is a land acquisition and why is my land being acquired?
To ‘acquire’ is to buy or obtain an asset or object (in this case land). The process is called ‘land acquisition’. Land can be acquired by negotiation with the landowner or by compulsory acquisition.
Government departments and agencies can acquire land that is required for a public purpose.
While land acquisitions are avoided where possible – some infrastructure projects like roads, railways and tunnels that cater to an identified critical need are unable to avoid property acquisitions.
2. Who can compulsorily acquire land?
In NSW, a number of government bodies have legal power to acquire private land. They are called “acquiring authorities” and include various government agencies, some state owned corporations and local councils.
Acquiring authorities may acquire the whole property, part of a property or an interest in the property including easements for power lines, sewer or water.
3. How is land acquired?
The acquisition of land is undertaken in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 (the Act).
Most privately owned land is acquired by government through negotiation and agreement – the Act encourages this.
However land can also be acquired without the landowner’s agreement (compulsory acquisition).
4. What is acquisition by negotiated agreement?
An acquiring authority can negotiate with landowners to purchase the land. This is called acquisition by negotiated agreement and involves the landowner and the acquiring authority agreeing on the value of the land and the amount of compensation. With this type of acquisition, the Valuer General in not involved.
This is step four on the flowchart.
5. What is compulsory acquisition?
Compulsory acquisition is the acquisition of land by government under statutory power, without the need for consent from the landowner.
All levels of Australian government and some entities acting on behalf of Government can compulsorily acquire land for a public purpose, they are as known as an ‘acquiring authority’.
Compulsory acquisition can be used when an owner is willing to sell their land, when the land has no title, when an owner has difficulty establishing proof of title, or even if the owner cannot be found and if the owner does not agree.
The acquiring authority serves a notice on the landowner (called a proposed acquisition notice or PAN) inviting them to negotiate for the disposal of the asset or part of the asset.
6. Who approves the compulsory acquisition?
This will vary depending on the statutory powers involved. However the Governor of NSW’s approval is always required for land to be compulsorily acquired by declaration in the government gazette.
7. What is a Proposed Acquisition Notice (PAN)?
A PAN informs the landowner of the process for a compulsory acquisition going forward. It notes that in 90 days, if negotiations are unsuccessful, the acquirer can acquire the asset or part of the asset and compensation will be calculated. Even if the landowner accepts the initial or negotiated offer, this is viewed to be a compulsory acquisition.
8. What do I do when I receive the Proposed Acquisition Notice?
Make sure you are in contact with the acquiring authority, someone who will be managing your case and who clearly understands the process and can speak on behalf of the agency.
The Office of the Valuer General will also contact you to ensure you have access to the assistance you need.
9. What type of land can be acquired?
Land of any type of tenure, including freehold.
An acquiring authority can acquire part of your property, all of your property or an easement on your property, depending on the need.
10. Don’t you need to wait until the project receives planning approval before you acquire my property?
Generally, agencies will not begin acquisition until a project is sufficiently developed to identify specific land needs. While this may usually be after planning approval (if one is required), there is a statutory requirement for planning approval to be obtained before acquisitions can commence.
Please note that plans can be updated or altered throughout the life of a project. Please note that designs change as more information becomes available and project improvements are made.
11. How much of my land can be acquired?
Part or all of a property can be acquired.
12. What if I live in the property?
Compulsory acquisition of a property or part of a property in which you live could include:
- acquiring part of the land adjacent to your residence. If your dwelling is a flat or home unit, this land could also contain a structure such as a garage or unit
- compulsorily acquiring your residence
- removing your ownership right to further develop the main residence, for example it could restrict your ability to erect structures above a certain level (for example, installing antennas) or removing your right to dig below the soil (for example, installing a pool)
- compulsorily creating a right of access over part of the land
- compulsorily negotiating an agreement in relation to a temporary right in relation to your land. Government could require temporary access through your property to improve that part of the property that is to be used for a public purpose
- a right that you hold over the land is not renewed, such as a Crown lease.
Debbie and Geoff live in a three bedroom house located on a two hectare suburban block close to the centre of a major city. In July 2008, the Road Department commenced negotiations with Debbie and Geoff as well as several other neighbours to acquire parts of their land.
The affected area adjacent to Debbie and Geoff’s dwelling is 50 square metres, which is 10 metres wide by five metres long, and it is located along the rear boundary of their block.
When the land is acquired, Debbie and Geoff will not be able to conduct any activities on that part of their (previous) land.
13. If the authority changes its mind – will it sell the land back to me first (Recommendation 16 of the Review)?
An objective of the Act is to provide compensation on just terms (or to place the landowner in the same position as before, no better, no worse).
This circumstances where land previously thought needed and purchased is no longer needed is avoided by agencies wherever possible. This is why acquisition usually takes place after project approval.
Should an acquiring authority no longer have a need to own the land, the land would be sold in the usual way on the open market. The previous landowner received market value for the land and was in addition compensated for the disturbance of having to move.
14. What is ‘compensation’?
The Act provides for compensations on “just terms” and aims to place the land owner in the same position prior to the land being acquired. Compensation is the amount of money paid to the landowner and other parties with an interest in the land when land is acquired.
In a compulsory acquisition, compensation refers to both the unaffected market value of the land and other payments, for example a payment of money to compensate for the discomfort in having to move house.
15. What can I be compensated for?
You can be compensated for the market value of the land (in the absence of the project) and reasonable costs incurred by you during the acquisition paperwork. However you should first check the proposed fees for legal, valuation or other services with the acquiring authority. They need to be reasonable.
16. What if I want to stay on the land?
You can generally stay on the land for approximately 3 months or longer after it is acquired. However landowners should confirm this at the time with the acquiring authority. For this to apply you must be living or running a business on the land at the time it is acquired. This is to assist people to purchase another residence or business property.
17. Will I receive the additional compensation if I sell my land through a negotiated agreement?
Yes. Matters that are considered for compensation remain the same whether a negotiated process or compulsory acquisition. The NSW Government has a preference for negotiated processes.
VALUATION AND FINANCE
18. Is this process a negotiation or does the government dictate the value?
The Act encourages the acquiring authority and the landowner to reach an agreement on the amount of compensation. Most land acquired in NSW is settled in this way, through what is called a negotiated settlement.
The acquiring authority will approach the landowner to discuss the purchase of their land. The agency will arrange for a qualified valuer to provide a report on the value of the land.
19. Can I have my own valuation of my property?
Yes, landowners may obtain their own, independent valuation and legal advice. This can be paid for by the acquiring authority as long as the costs are reasonably incurred and some steps are followed to make sure this process meets certain standards. The Act requires that costs must be reasonably incurred.
20. How do I get my own valuation?
You can go to the Australian Property Institute who can recommend people experienced in valuation in your area.
The valuers work must be to a professional standard – feel free to talk to the acquiring authority about how that should look.
21. What if none of the quotes gathered by the landowner are considered reasonable in terms of fees?
The acquiring authority can discuss this process with the valuation service provider. If unrealistic fees continue to be offered, a compulsory process can start and the Valuer General will then determine the value of the land and the compensation paid to the landowner.
Landowners should be aware of this. Its important to make sure your payments are appropriate.
22. How is a decision reached on compensation?
Landowners are compensated when their land is acquired. The flowchart shows that compensation is considered by the acquiring authority when negotiated by agreement, or the Valuer General in a compulsory acquisition.
The Valuer General determines how much the compensation amount is. This process is managed for the Valuer General by Property NSW. This team is qualified, experienced and importantly, independent – they have no conflict of interest. When assessing the amount of compensation, a valuation report is prepared. The report:
- shows what has been considered by the valuer;
- addresses the concerns recorded by the former landowner on the Section 39 Claim for Compensation form;
- addresses any other valuation issues raised by either the landowner or the acquiring authority; and
- explains how the amount of compensation was determined. The information considered for the report is provided to the landowner and acquiring authority after the land has been compulsorily acquired.
All determinations of compensation are reviewed by a second valuer who was not involved in making the determination.
This report is forwarded by the acquiring authority to the landowner with the decision about the amount of compensation.
23. How do I get my own legal advice?
You can contact the NSW Law Society or search for solicitors online. It’s in your interest to carefully select professional advisors to help you with this process. You need to be assured that these advisors are working to your best interest.
Please note that valuation and legal fees will not be reimbursed for subsurface acquisitions. There is usually no compensation for subsurface acquisitions.
24. When can I receive the compensation monies?
The acquiring authority provides the cheque or processes the money to a bank account after paperwork is complete and upon settlement.
25. Who pays the professional fees I have incurred obtaining legal and financial advice to assist me in this process?
The acquiring authority will reimburse fees reasonably incurred during the acquisition process. However its good practice to check these with the acquiring authority.
Generally, steps need to be followed to make sure this process meets certain standards. You are encouraged to discuss these with the acquiring authority.
26. What if I have a mortgage?
If you have a mortgage, the mortgagee (e.g. the bank or financier you have the mortgage with) is entitled to be paid the amount owing on the loan. The amount paid for the land may be more or less than the amount owing on the mortgage.
Approval from the mortgagee is required prior to any compensation payment (including any advance) being made.
27. Is compensation for an easement assessed differently to that for the whole property?
If the land to be compulsorily acquired is:
- an easement,
- the right to use land,
- land under the surface of the land such as a tunnel, pipe, sewage or electrical cables,
compensation is not payable except for any actual damage caused in the construction of the work or caused by the work.
If land under the surface is compulsorily acquired for the purpose of constructing a tunnel, compensation is not payable unless:
- the surface of the overlying soil is disturbed; or
- the support of that surface is destroyed or injuriously affected by the construction of the tunnel; or
- any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected.
If the land compulsorily acquired consists of or includes an easement or right to use the surface of any land for the construction and maintenance of works (such as canals, drainage, stormwater channels, electrical cables, openings or ventilators), the easement or right is taken to include a power, from time to time, to enter the land for the purpose of inspection and for carrying out of any additions, renewals or repairs. Compensation under this part is payable accordingly.
28. Will I be paid interest from the time my land is compulsorily acquired to the time I get paid the market value and compensation?
Yes. If a voluntary acquisition, contracts are exchanged as per a normal sale.
29. What about GST?
Check: The Australian Tax Office (ATO) website has information on whether GST applies to the compulsory acquisition of land. Generally, the acquisition of land or easement of land is not considered to be subject to GST by the ATO and therefore compensation payments typically do not attract GST [check]. For more information, visit the ATO website. You should always obtain your own financial advice about tax liability.
30. Who pays taxes, land rates and utility charges outstanding at the date the land is acquired?
Any taxes, land rates and charges due and unpaid as at the date the land is acquired are the responsibility of the landowner. They may be deducted from the compensation amount paid by the acquiring authority.
TRANSFERRING THE PROPERTY OWNERSHIP
31. Will someone ring me and tell me when the notice has appeared in the government gazette? How do I find out?
Owners are contacted a number of times prior to the acquisition notice appearing, by phone or letter. If the owner lives on the land they are contacted again after the gazette has appeared.
Within 30 days of the gazettal, the Valuer General must provide a report to the acquiring authority on the determination of compensation. This is then forwarded to the landowner.
32. What is the role of the NSW Valuer General?
The Valuer General independently determines the amount of compensation to be paid by the acquiring authority to the former landowner. This is instructed in the Land Acquisition (Just Terms Compensation) Act 1991.
The Valuer General does not act for either the former landowner or the acquiring authority. They are independent.
Independence is important so there is clear separation between the acquisition of land by government and the process to determine compensation if parties don’t agree.
Landowners and acquiring authorities are encouraged to provide information, ask questions and clarify matters during the process of considering the amount of compensation.
33. Who does the valuations on behalf of the Office of the Valuer General?