Home owners who challenged in court the compulsory purchase of their property by government agencies tended to receive payments larger than what they were offered previously, according to an analysis by the NSW Parliamentary Research Service.
The service's analysis, which is disputed by the Office of the Valuer General, attempts to shed light on a growing area of controversy in Sydney and NSW.
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The issue of compulsory acquisitions has come to the fore due to the significant number of road and rail projects being built by the state government, many of which require the purchase of homes or units for construction.
According to the Research Service's analysis of figures from the Finance Minister, Dominic Perrottet, there have been about 2970 compulsory acquisitions in the past eight years. Over 80 per cent of those were concluded by agreement between the agencies buying the property – such as Roads and Maritime Services or Transport for NSW – and the property owner.
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When agreements cannot be reached, the independent Office of the Valuer General determines compensation, subject to review in the Land and Environment Court.
The majority of disputed compensation cases are resolved prior to a court hearing. But in a sample of 58 cases between 2007 and 2016 that went to hearing, the service found the level of compensation ordered by the court was almost 58 per cent higher than the initial offer.
The average increase was different for different types of property. Of the 10 cases involving urban residential properties, the average compensation ordered was almost 33 per cent higher. But in two instances, the court ordered less compensation than had been previously offered.
In all 16 cases involving rural residential land, the court's determination of compensation was higher than the previous offer. The average difference between the court's determination of rural residential land and that previously offered was about 42 per cent.
A spokeswoman for the Office of the Valuer General said the office was "not consulted in the preparation of the Parliamentary Research brief" and that individual outcomes were determined by individual factors.
"There is no evidence to suggest that the increased compensation determined by the Land and Environment Court in the small sample of cases examined in the paper would be replicated across the board," the spokeswoman said.
Labor's finance spokesman, Clayton Barr, said while the group analysed by the Parliamentary Research Service is not big "it does certainly give some pretty rough indication of the situation".
Mr Barr said Labor had argued people facing compulsory acquisition should be awarded an upfront payment on which they could seek legal advice.
"Because people feel quite powerless, why not give them, and we nominated a figure of $5000 out front so people could get their own valuation and legal advice, to try and even up the playing terms," he said.
The NSW government has increased the maximum compensation for disturbance to property owners – known as solatium – from $27,235 to $75,000 as part of a package of reforms.
The service's analysis does not examine why court-awarded compensation might be higher than other offers. But it concludes: "most of the relatively few compulsory acquisition cases that were determined at hearing since 2007, the Court's determination of market value was higher than the offer made to the property owner".
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