Compulsory Acquisition has been in the news a lot recently.
In 2016 the State Government was forced to make payouts to residents who were not adequately compensated when their homes were acquired for the new WestConnex freeway.
But it’s not just roads which can lead to compulsory acquisition, as residents of Randwick have recently found out. The new development at Prince of Wales Hospital has seen some local residents receiving notice and others questioning whether their location puts them at risk.
So just what is compulsory acquisition, how will it affect the property market, and if your home has been chosen for compulsory acquisition what are your options?
What is compulsory acquisition?
Compulsory acquisition, also sometimes known as “resumption,” takes place when an authority such as the Government purchases privately owned land or property. It is usually undertaken for the purposes of infrastructure like roads or private transport but can sometimes also occur for other reasons including public safety.
The Australian Constitution allows compulsory acquisition to occur under Section 51 (xxxi) and at State level, the NSW Land Acquisition Act of 1991 outlines the appropriate compensation which residents can seek.
What kind of compensation is offered?
The price of the property is determined by market value and is independently assessed by the Valuer General, so residents whose homes have been compulsorily acquired are unlikely to be out of pocket. Affected residents can also claim the costs of stamp duty, mortgage refinance fees, removalists and other costs associated with finding a replacement home.
However, the emotional toll of leaving a home against your will, and the mental and administrative costs of buying a new home, can weigh heavily. Being compulsory, residents have few options for recourse, although they have the option to appeal the acquisition within 28 days of receiving the notice.
The good news is that as a result of changes brought in after the WestConnex dispute, residents can now claim up to $75,000 in compensation for “intangible losses” such as emotional connection to the property or the inconvenience of finding new work or schooling.
Who is affected in Randwick?
Next year, 89 Randwick properties will be bulldozed to make way for the new $720m Acute Services Building at the Prince of Wales Hospital. While some of these are already government or university-owned, a large portion are private homes, including 53 homes on Eurimbla Avenue, 28 on Botany Street and 8 on Magill Street.
The new building, which will link the UNSW medical school to the hospital, will provide a new emergency department including a psychiatric emergency department, and an improved intensive care unit. While this will be a valuable addition to our area, it is not much comfort to residents who are forced to leave their homes.
How will it affect the local market?
The forced acquisition of homes around the hospital and University will lead to an increase in buyers looking for a new property, which could see a increased competition and an uplift in the local market. It will also reduce the number of homes available to buy. We’ll have to wait and see what happens as those whose homes have been acquired either try and re-enter the local market or make a decision to move elsewhere.