Compulsory Acquisition: A Homeowner’s Guide

Compulsory acquisition is a scary topic for most homeowners, and it's not without precedent in the inner city and inner west.

Here’s everything you need to know.

What does compulsory acquisition involve?

Compulsory acquisition is sometimes also known as “resumption”. It happens when an authority, most typically the government (Federal, State or local council), acquires privately owned property for a specific reason. It can be done with or without the owner’s consent.

Land or property is sometimes compulsorily acquired to build roads, tunnels, public transport or other infrastructure projects. Here in Sydney, local property has been compulsorily acquired in recent decades for projects such as a desalination plant, hospital expansion, and roads, including the M2, M7, M5 East, M12 and M4. More recently, in our area, we’ve also seen compulsory acquisition for the NSW State government’s Sydney Metro, WestConnex and light rail, as well as for a new road at Green Square.

The government can also compulsorily acquire land for public safety reasons, such as contamination. A recent example is the ACT government’s acquisition of houses contaminated with asbestos insulation and the NSW government’s acquisition of contaminated land at Camellia, near Parramatta.

And it’s not always the whole property. Sometimes, the acquisition is an easement over part of the land, or restrictions on what you can do to the property, or how far you can dig under the soil - a type of acquisition known as "substratum acquisition" that has happened for tunnels like WestConnex.

How does it work?

Compulsory acquisition is permitted under Section 51(xxxi) of the Constitution of Australia - the provision made famous by the now-classic Australian film, The Castle.

The process for compulsory acquisition varies depending on whether the State, Commonwealth, or local government is acquiring it.

Here in NSW, the government reformed its property acquisition process in 2016 to provide a fairer and more transparent acquisition process. This came after negative coverage of previous acquisitions for WestConnex. Different guidelines cover local councils.

All current legislation dictates that an acquiring government must pay fair market value. Some owners even end up receiving more than this. But this is often little consolation for the emotional strain and stress that can come from being forced to sell and move.

The process of acquisition

Typically, acquisition is a long process, and the government is required to give ample warning. So, while it can be scary, no one gets evicted immediately.

The NSW government, for instance, begins by sending a Commencement Letter, which triggers a six-month negotiating period. During this time, a support team guides you through the process. An independent valuer assesses the property, and as an owner, you’re encouraged to get your own valuation report and legal advice too. Sometimes compensation other than the property’s value is offered.

And, finally, as The Castle made clear, if you don’t get the right outcome first-time, you also have the right to appeal.