Compulsory Acquisitions !

The ultimate disaster for a Sydney homeowner is to find that their property is in the path of a major road extension or in the way of the new Sydney Metro.   The evil hour arrives when the postman drops mail in their letter slot advising that they are subject to "compulsory acquisition " - and horror will turn to rage when they read the price offered.

The price of property is determined by the Valuer General - and usually it bears no relation to what is termed "market value " - which is the price comparable homes nearby have brought when they recently changed owners.   The usual reaction is to lodge an appeal, and here a curious aspect of the acquisition process comes into play.    If you continue to live in the home while the appeal runs its course the government will charge you rent for that privilege !

The price the government pays for compulsory acquisitions has been a hoary old chestnut for many years.   Most of the victims find it impossible to buy a home at a comparable standard in the same area for that amount of money and suffer a loss.   The appeal process is slow and tedious, and rarely delivers a result that satisfies the aggrieved owners.

This whole question was the subject of a government enquiry which never saw the light of day for the past two and a half years.  When it finally surfaced it delivered bad news for the government.  Its finding was that the average home was being acquired at between $ 200,000 and $ 300,000 below replacement value.

The government has implemented immediate changes.   There is now a six month negotiating period to settle the price and if that fails and the matter goes to appeal, the charging of rent if the owner continues to live in the property has been quietly dropped.

Another important amendment concerns what is termed  "Solatium " - or the "disturbance " an owner experiences in moving from one property to another.   In the past this was pegged at just $ 27,235 and it has now been increased to $ 75,000.    Basically, the government is throwing another $ 50,000 in to compensate for the various costs and eventualities involved in moving house.   All these changes will be backdated to acquisitions that occurred after 2014.

The Valuer Generals report indicates that in this state there is an average of 400 acquisitions each year and this revision of terms will probably cost the government an extra sixty million dollars. It will also put pressure on other states to offer similar terms.

At last a degree of fairness is emerging in compulsory acquisitions.  The provision of public services will always come into collision with private ownership and for the good of the city property will need to be acquired.   In the past, this has been below replacement value and the unfortunate owner has suffered loss.   With the price escalation of recent times, in many cases the loss to an owner can be equal to the major prize in the $2 state lottery.

Most people will still dread that compulsory acquisition order, but at least the terms are a little more equal !