Land Acquisition under the Public Works Act
Written by Amy Cowan
In March 2023, the High Court directed the Hastings District Council to renegotiate suitable compensation for a landowner in relation to the Council acquiring land for roading and storm water detention as part of wider urban development. This may have left you thinking about how the Council acquires land it needs for future development.
What is the Public Works Act 1981?
The Public Works Act 1981 gives the Crown, Councils and utility operators power to acquire privately owned land for public works. These works are generally associated with creating new or upgrading old public services, or the building of new roads, schools or parks.
The Act does not authorise these projects, rather it provides a process for the acquisition of land (whether whole or in part) and payment of compensation. Land can be acquired on either a permanent or temporary basis depending on the works that are designated to be carried out.
Land Information New Zealand (LINZ) is the agency responsible for administering the Act and this is the agency with whom you will be dealing with if your land is designated under the Act.
There are two ways in which private land can be acquired by the Crown, either by agreement or taken compulsorily.
Land Acquired by Agreement
First, the Crown agency will identify any property required for a public work. LINZ will then issue a notice of desire to acquire land to the private landowner, this notice will also be registered on the Record of Title for the designated land.
Once the notice has been served on the landowner, the parties then have three months to reach an agreement on the terms of the sale and purchase. LINZ will obtain a valuation of the designated land and the landowner should also obtain their own valuation, the costs of which will be covered by the Crown agency wishing to take the land. These two valuations are then exchanged and serve as the basis for negotiating the terms of the sale and purchase agreement which may include other compensation and entitlements.
If the Crown agency and the landowner agree on the terms, the final agreement will be prepared and signed by the parties.
Generally, compensation is paid when the acquisition is settled, however in some cases an advance compensation payment will be made.
In some circumstances the Crown agency may decide that your land is no longer required for a public work. In this case, you would be entitled to have your reasonable costs incurred during the negotiation process paid by the Crown agency.
Compulsory Acquisition of Land
If you do not reach a negotiated agreement within three months of the service of the notice of desire to acquire land, the Crown agency can, within one year of service, proceed to take the land compulsorily.
Any person with an ownership or other interest in the designated land has a right to object. For disagreements over compensation, this will be referred to the Land Valuation Tribunal. Any other objections would be via in the Environment Court process.
Compensation to Landowners and Tenants
Compensation is available to the landowners, as well as parties who have an interest in the land (such as a tenant), if that interest is acquired under the Act.
The general principle of the Act is that a landowner is entitled to full compensation for their land so that their financial position is no better or worse than before the public work took place. The value of the land will be based on the amount that the land would be expected to be sold, if sold on the open market, by a willing seller to a willing purchaser on a specific date – disregarding any negative or positive effect the public work would have on that value. If the Crown agency only requires part of your land, you would be entitled to compensation for the value of that part of the land acquired.
The Act requires the Crown agency to pay for the landowners reasonable legal and valuation costs. Other costs you may be compensated for include:
- Household removal costs
- Business or residential tenant removal costs
- Business losses suffered
- Damage to land caused by the public works to any remaining property
- Disturbance costs
- Accessibility improvements
- Other professional costs in addition to legal and valuation fees.
We can help by providing practical legal advice as soon as you receive a notice of desire to acquire land. Our team will work with valuers and other professionals to ensure you receive your full and fair entitlements. In some circumstances, this may require measured and long-term negotiation. In others, it may require a more efficient approach to achieve an agreement sooner so that you can sell and repurchase in the same market conditions.