What you are entitled to as compensation after an Government acquisition?

What you are entitled to as compensation after an Government acquisition?

Aug 3, 2022

The Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act) dictates what landowners are entitled to as part of an acquisition. This post will provide an outline of the relevant sections of the Act that you should know about and what you may be entitled to.
Section 55 of the Just Terms Act is critical information. It outlines the “Heads of Compensation” that are applicable as part of a compulsory acquisition.

Section 55 is shown below:

“55 Relevant matters to be considered in determining amount of compensation
In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division)—
(a) the market value of the land on the date of its acquisition,
(b) any special value of the land to the person on the date of its acquisition,
(c) any loss attributable to severance,
(d) any loss attributable to disturbance,
(e) the disadvantage resulting from relocation,
(f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.”

Different Heads of Compensation from the above are applicable depending on if the property is owner occupied, an investment, residential or commercial. Before we delve too far into the detail, its worthwhile defining a jargon term that will pop up regularly.

That is, what is the Public Purpose?

The Public Purpose is the reason the compulsory acquisition is required. Common examples are road widening or to construct infrastructure (airport, school, hospital, rail network, etc). Now let get to the reason why were all here. What are you entitled to as part of your compensation figure? This post will focus on residential property.

The heads of compensation will be covered individually below:

55 (a) Market Value

The market value of the property is defined in the Just Terms Act under Section 56(1). The individual sections have not been quoted but you can find them all in the Just Terms Act. Section 56 entitles the landowner being compensated to the market value is the property being acquired disregarding the public purpose for the land being acquired.  Disregarding the public purpose means the valuation has to exclude the value of any disadvantage or benefit that would result from the Public Purpose.

An example of a disadvantage is when you previously were in a quiet location and after the acquisition, your property will suffer from aircraft noise impacts.

A common example of a benefit is a rezoning allowing a higher density use because of proximity to a new railway station. If the railway station didn’t exist, the land would probably would not be rezoned.

However, most examples are not as black and white. This is where expert town planners often get involved and can point to what would have happened if the public purpose didn’t exist.

55 (b) Special Value

Special value is value that the property has to the owner that doesn’t get captured in the market value. Things like modifications to a dwelling to allow wheelchair access. These modifications would be expensive to install but don’t attract any value to the broader market. Special value claims are typically rare.

55 (c) Severance,

Severance is applicable if the acquisition bisects or severs the land from other lands. For example, a freeway cuts a parcel in half and the half of the land can no longer be accessed. The affect on value would be significant. This is a rare occurrence these days as most acquiring authorities will either acquire the whole parcel and make efforts to not to have severed parcels in the planning stage of the project.

55 (d) Disturbance,

Covered in Section 59 of the Just Terms Act. Disturbance costs relate to:

  • legal costs and valuation fees reasonably incurred – You get reimbursed for valuation fees (as long as the valuer is appropriately qualified like the team at Titan) and legal fees incurred.
  • financial costs reasonably incurred – examples of this include including mail forwarding, mortgage discharge, removalists fees etc.
  • stamp duty costs up to the equivalent value of the property being acquired – this only relates to owner occupied properties only,
  • If you are running a business from the premises, there may be additional impacts that would result from business disturbance here.

55 (e) the disadvantage resulting from relocation,

Previously referred to as “Solatium”, this is a one off payment relating to the sentimental value of owners or tenants being in the place at one time. It is indexed annually from starting at $75,000 and at the time of this post, the current indexed amount is $85,350. Depending on how long you have occupied the property, you may be entitled to all or a part of this amount – Relates to owner occupied residential properties.

55 (f) Injurious Affection or Betterment.

These were touched on in 55(a) and the value of changes that would result from the Public Purpose, positive or negative, get covered off here.

The Just Terms Act is very lengthy legislation and there is a lot to know. There are also a plethora of variables that can apply including whether you are a tenant, business owner or investor. If you require a summary based on your property and circumstances, would like a referral to solicitors that work in this area, or wanted to engage for your compulsory acquisition matter, please get in touch with our expert team.