The Hidden Losses of Partial Compulsory Acquisition

When the government takes just a strip, corridor, or small part of your land, it can hurt your finances. In some cases, it’s worse, because the land you keep might drop in value.

Understanding the compensation you deserve can help you avoid settling for less and make sure you receive your full entitlement.

Key takeaways

• With partial acquisition, you can claim compensation for the land taken and for how the rest of your property is affected. These are two separate claims.
• Severance means your remaining land loses value because part of it was taken.
• Injurious affection refers to how the government’s activities on the acquired land can lower the value of the land you keep.
• The before-and-after valuation method looks at your property’s value right before and right after the acquisition. The difference between these values shows how much compensation you should get.
• The offer you get from the acquiring authority is often not the full amount you deserve. Independent advice can reveal you are entitled to more.

What partial compulsory acquisition actually means

If the government takes your whole property, that’s a full acquisition. In a partial acquisition, only part of your land is taken. This might be a strip along the front for road widening, a corridor for a gas pipeline, or a narrow easement for rail or utilities.

Losing a small part of your land might not seem like a big deal at first. But often, the part taken is important. For example, losing a strip at the front can block vehicle access, a corridor through farmland can split it in two, and a small easement next to your house can take away space for future extensions or reduce your privacy.

It’s clear you lose the land that’s taken. What’s less obvious is how the rest of your property is affected.

The three things you can claim and what they mean

Australian law recognises that partial acquisition can cause several different types of loss. The Lands Acquisition Framework lists the main types of compensation, and some apply only when part of a property is taken.

Market value of the acquired portion

The first step is to work out the market value of the land taken, based on its value at the time of acquisition. The valuation ignores any changes in value caused by the project itself, so if a road project has lowered prices in your area, that effect is not counted.

Severance

Severance is when your remaining land drops in market value because of the acquisition. It’s a separate type of compensation from the market value of the land taken, and it’s often missed or underestimated in the authority’s offer.

For example, if a pipeline easement cuts through a rural property, the land is split into two parts. Each part may be worth much less than half of the original property. The difference between the combined value of the new parcels and the original value is a severance loss you can claim.

Severance applies whenever taking part of your land makes the rest less useful, harder to access, less valuable for development, or harder to sell.

Injurious affection

Injurious affection is similar to severance but covers a different kind of loss. Severance is about losing part of your land, while injurious affection is about the impact of what the government does on the land it takes.

Things like noise, vibration, extra traffic, overshadowing from new infrastructure, loss of amenity, or less privacy from construction or ongoing use of the acquired land can all lower the value of what you keep. This loss is covered by injurious affection and can apply during construction or after the project is finished.

Injurious affection is often the most debated and undervalued part of compensation in partial acquisition claims. It takes an expert to assess how the government’s activities on the acquired land will affect the value of what you keep over time.

How the before-and-after method works

The usual way to value partial acquisitions is the before-and-after approach. Here’s how it works:

1. Before value: An expert valuer works out the market value of your whole property just before the acquisition, as if the project wasn’t happening.
2. After value: The valuer then works out the market value of the land you keep, right after the acquisition, considering the loss of land and the effects of the authority’s activities.
3. The difference between the before and after values is your total compensation for severance and injurious affection.

You then add the market value of the land taken to this amount to get your total compensation.

While this method sounds simple, it takes real skill and expertise to do it right. The before-value should show your property’s full potential, like development options, productivity, and anything a buyer would notice. The after-value must honestly show every way your remaining land has lost value, whether that’s physical, practical, or what buyers would pay.

When the authority uses this method, their valuer might set the before value too low and the after value too high. This makes the difference smaller and means you get offered less than you should.

Why the initial offer is often not enough

The acquiring authority must legally make you a compensation offer, but they don’t have to make it generous. Their valuer works for them and follows their instructions.

This is not meant as a criticism of individual valuers. It is simply how the process works, and it is exactly why having an independent valuer on your side is so important in a partial acquisition.

An independent valuer commissioned to work in your interests will scrutinise the pre-existing value for every defensible attribute of your property. They will interrogate the after value for every material way the acquisition has diminished what remains. They will identify severance that the authority's offer has glossed over and injurious affection that has not been properly assessed.

In most parts of Australia, the acquiring authority has to pay your reasonable legal and valuation costs. This means you can usually hire your own experts without paying out of pocket, and it often leads to a better outcome.

Knowing what fair compensation covers is just the first step. Getting expert advice is what helps you actually receive it.

Don't let a partial offer become a permanent loss

If you’ve been told that only part of your property is being taken, don’t assume the offer covers everything you’re owed. Partial acquisitions can be just as serious as full ones, or even more so. Because these claims are complex, you need expert help..