Significant reforms to the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act) will take effect on 1 March 2017 with the commencement of the Land Acquisition (Just Terms Compensation) Amendment Act 2016 No 59.

The reforms implement important changes to the land acquisition process in New South Wales with immediate implications for both acquiring authorities and landowners. The key reforms include:

  • Imposing a mandatory 6 month negotiation period for proposed acquisitions before the compulsory acquisition process may be commenced (unless agreed otherwise or where a shorter period is approved due to exceptional circumstances). Any period of negotiation that has occurred before 1 March 2017 is to be taken into consideration when calculating the 6 month period. Interestingly, in the case of abandoned acquisitions, currently the right to be paid any compensation under the Just Terms Act only arises once a proposed acquisition notice (PAN) has been given by the acquiring authority. It is conceivable that landowners may incur significant costs in obtaining legal, valuation and other relevant advice during the mandatory 6 month negotiation period before a PAN is given. The reforms are silent as to whether acquiring authorities will be required to compensate landowners for costs incurred during the negotiation process before a PAN is given.
  • The term ‘solatium’ has been renamed ‘disadvantage resulting from relocation’ and the maximum amount of compensation payable under this head has been increased from $27,235 to $75,000 (and will be indexed annually to CPI) and may be further increased by regulation.
  • A notice period of less than 90 days under a PAN requires the concurrence of the Minister for Finance, Services and Property.
  • Reviews of decisions to refuse hardship applications will be available to landowners. These reviews are to be conducted by suitably qualified independent persons appointed by the Minister for Finance, Services and Property.
  • Former owners of compulsorily acquired land will not be required to pay rent for the 3 month period after the land is acquired where they remain in occupation of any building on the acquired land that is their principal place of residence or their place of business.
  • Claims for compensation may now be lodged directly with the Valuer-General instead of with the acquiring authority.
  • An acquiring authority must now provide the Valuer-General with a list of issues the authority believes are relevant to the determination of the amount of compensation, within 7 days of it compulsorily acquiring land.
  • The Valuer-General must provide the compensation determination together with the land valuation report, directly to the former landowner at the same time as the acquiring authority.
  • The timeframe for the acquiring authority to provide a compensation notice to the landowner has been increased from 30 to 45 days, and this timeframe may be extended by up to 60 days by the Minister for Finance, Services and Property at the request of the Valuer-General.
  • Compensation for market value assessed on the basis of the reasonable cost to the owner of equivalent reinstatement in another location will now be available in limited circumstances.
  • In circumstances where land is acquired for a public purpose but is not ultimately required for that purpose, the acquiring authority will be required to first offer the land for sale to the former owner at the market value of the land at the time the offer is made, provided not more than 10 years has elapsed since the acquisition and other requirements are satisfied.

The reforms will have significant implications for both acquiring authorities and landowners in terms of the processes to be followed and the rights and responsibilities of each of the parties.