Resumed properties are under valued – Margaret Lomas

Resumed properties are under valued – Margaret Lomas

 

I ask Margaret Lomas about the fairness or otherwise of the compensation you get from Government if your land is resumed and what can you do if you are not happy? Margaret tells us about her personal family experience in this area.

 

Transcript:

Kevin:  I was interested to read a story recently – actually, it came out of the ABC – about a property owner in New South Wales not being fairly compensated for resumption of land, whether that’s for some kind of development. We hear about these stories quite often. Government is very quick, of course, to come out and say, “Oh, no, we fairly compensate them.” I want to talk to Margaret Lomas about this from Destiny Financial Solutions.

Hi, Margaret?

Margaret:  Hi, there. How are you going?

Kevin:  Well, thank you. I know this is a particular bee in your bonnet. Have you struck this on a number of occasions, Margaret?

Margaret:  I’ve actually had personal experience with this a long time ago when my father owned a business. He had had that business for a good 30 or 35 years, employed about 20 or 25 people, and owned the land and premises in which that business operated. So the business rented it back from him and my mom.

As he was getting up closer to retirement– I think he would have been about 58 or 59 at the time– the decision was made to put a main road right through his land. Initially the main road was going to go in front of his land, which would have given him an advantage in business. But they decided that they would shift that main road a little bit, and it ended up going straight through his land.

Now, what they actually did was the amount of money that they offered him to resume his property was some half of what it was really worth. He at the time had an independent valuer who stated what it was really worth.

What the government actually said to him at the time and I remember it so clearly was that that’s fine, he could fight them in court if he wanted to, but what they would do is hold it up in court for 10 years anyway and at the end of the day, he probably wouldn’t win. So he could either shut up and take the money or he could try and not take the money, in which case they would put the road there anyway and force him out.

Now, to me that’s bullying. What ended up happening to my dad was because he had all of these people working for him, he felt committed to them, he actually moved to rented premises at the time. He couldn’t afford to rent something in as good a position as what he previously had, and within two years, the whole business was in liquidation.

Kevin:  As you say, that’s straight up bullying. There’s no question of that.

Margaret:  It’s bullying. So 60-years-old and he basically came out of a 35-year-old business with nothing because of those tactics. He had nothing to sell because one by one, he had to let the employees go. He couldn’t get the passing trade that he used to get. No one could find him anymore. He was in the back streets, instead of close to a good road. So it’s very sad.

But, unfortunately, the government does whatever the government wants to do. When they use bullying tactics like that where they say, “Well, you know, do what you like, but at the end of the day, we’re going to do it because it’s the law that we’re allowed to resume land, and you can fight us for fair compensation, but it’s going to take you 10 years.” A lot of people don’t have the heart for that kind of legal action.

Kevin:  In this particular case in New South Wales – and I know we have lots of instances all around Australia about this – this was in connection with the NorthConnex Road Project. Homeowners along there accused the New South Wales government of lowballing them on prices. The key points from the story where the legal team says that the government is hiring top-end lawyers to defend its acquisitions. So you’re up against the big hitters, aren’t you?

Margaret:  Yes.

Kevin:  It’s going to cost you a lot of money.

Margaret:  Oh, yes.

Kevin:  And they have a history of actually offering around about one-third of the true market value of the land. Now, these are current, and I know that what you were talking about your dad was they offered him even a lot less than that.

Margaret:  The thing is I think what they didn’t bargain for when they were first deciding and planning on WestConnex – which has obviously been in the pipeline for such a long time – was the sudden and increasing value of property in Sydney. So that made it even worse.

They may have been offering initially, maybe, 60 or 70% of the value. But in the end because land had sky-rocketed around them before they got the chance to make the offers, suddenly, they find themselves with a potential bill way, way bigger than they thought that would then have actually thrown the cost of the project out by billions. The thing is it’s cheaper for them to hire the top-end lawyers to fight it than it is to pay the money.

Kevin:  What would be your advice, Margaret, to anyone who’s facing this?

Margaret:  Unfortunately, I don’t have any good news for anybody, because the only option… there’s a couple of legal options. To me there could be potentially some misleading and deceptive conduct here. It depends on what the initial discussions were. If the government is say, “We’re going to get you fair-market value,” and you can conclusively prove that it hasn’t been fair-market value, then, technically, you might have a misleading and deceptive conduct case on your hand – in which case, the Department of Fair Trading will take that on for you at no cost to you. But how far you’ll get with that is another thing.

Outside of that: hiring your own lawyer. But, you know, it costs a lot of money to be in court, and the government will absolutely take their time over it. They don’t care how much money they spend.

To be honest, it isn’t worth your while to try to get fair-market value. Even if you think it’s the right thing to do, there’s very little you can do. The law does state that resumption of land is a legal process, and when you buy your property, there is fine print in that contract that states that at any time, the government can resume your land.

Even though they say they’ll pay fair-market value, I think you can forget about that ever happening. The best advice I can give you is to just make sure that you don’t buy somewhere where potentially there could be a main highway going through.

Kevin:  Yes. Reminds me of that wonderful movie The Castle. While that was a great movie, there are obviously lots of similarities around Australia of that actually happening.

Margaret:  Absolutely. I think the unfortunate thing about that movie – as fun as it was to watch – is that in real life, it wouldn’t happen that way. In real life, they wouldn’t win that case. In real life, the runway would have gone through their house and they would have received probably a third of its value then, as well.

Kevin:  Yes, it’s a terrible story. Maybe you might be suffering from that; we’d like to hear from you.

Margaret, I want to thank you very much for your time. Now, we’re into the summer season of your great show on Sky TV, as well.

Margaret:  I’m so excited because you’ve agreed to do a new segment for me at the top of the show, which is going to be great. It’s all about property investing – I guess, tips and tricks and all that kind of stuff. You’re going to use all of your expertise and experience from all those many years in real estate to provide a new top for the show for me, which is going to be great fun.

Kevin:  I’m really excited about it. So thank you for asking me. It’s a privilege, and I look forward to working with you on that, as well.

Margaret:  Fantastic.

Kevin:  That’s on Sky 602, isn’t it?

Margaret:  Absolutely. All weekend.

Kevin:  Margaret Lomas from Destiny Financial Solutions. Thank you so much. I look forward to talking to you again soon. Thanks, Margaret.

Margaret:  Thank you.

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Kevin Turner
kevin@realestatetalk.com.au
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