The Planning Act 2016 allows a person with an interest in a property (known as an 'affected owner') to claim compensation from a local council when the value of the person's interest is reduced as a result of a change to a local planning instrument (i.e. a change to a planning scheme). The Planning Act refers to these changes as 'adverse planning changes'.
In order to claim compensation, a person must have an interest in the property at the time the change to the local planning instrument took effect.
In most cases, a claim can be made when the change:
- limits the use of the property to its lawful use at the time the change was made, or the change is for a public purpose (this is known as a 'public purpose change');
- impacts upon or creates assessable development; or
- prohibits development.
What is the process?
For a public purpose change, an affected owner can simply make a claim for compensation with the local council within two years of the change taking effect.
For other changes, the process that needs to be followed is a bit more complex and involved. The steps that need to be taken are as follows:
- step 1 – an affected owner must make a written request to the local council requesting that its development application be assessed against the old (superseded) planning scheme provisions. This request needs to be made within one year of the change taking effect. The applicable forms can be found on the relevant local council's website
- step 2 – the local council must then refuse the request to assess the application against the old planning scheme provisions. This is the most important step. If the local council accepts the request there is no right to claim compensation
- step 3 – the affected owner must then lodge its development application with the local council
- step 4 – the local council must then assess the application against the current (changed) planning scheme provisions and either refuse, approve in part, or approve with conditions the development application. If the application is approved without conditions, there is no right to compensation.
Once an affected owner receives notice of the local council's decision, they have six months to lodge the claim with the local council.
How much can I claim?
The amount of compensation payable is the difference between the market value of the interest in the property immediately before the change and the market value immediately after the change.
The amount of compensation will be adjusted having regard to such factors as:
- if the affected owner received a benefit to the property as a result of the change; or
- if a partial approval, or the conditions imposed, would have been reasonable even if the application had been assessed under the old planning scheme provisions.
The claimable amount is also confined to the change to the market value of the property (and any applicable interest). Unlike the Acquisition of Land Act 1967, the Planning Act does not allow for compensation to be paid for damages or disturbance (consultant's fees, legal fees, etc).
Can I appeal?
A local council can approve, approve in part, or refuse a claim for compensation. If an affected owner does not accept the local council's decision on the claim for compensation, the Planning Act allows the affected owner to appeal the decision in the Planning and Environment Court. An appeal must commence within 20 business days of being provided with the local council's decision.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.