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Important Changes to Planning Compensation Claims (Financial Loss) Under the Planning and Environment Act 1987
The Consumer and Planning Legislation Amendment (Housing Statement Reform) Bill 2024 (the Bill) proposes significant legislative reforms as part of the State Government’s Housing Statement released in late 2023. Among these reforms are crucial amendments to planning compensation claims under the Planning and Environment Act 1987 (P&E Act).
What Is Planning Compensation?
Under the P&E Act, owners or occupiers of land may claim compensation for financial loss when:
- Land is reserved for a public purpose in a planning scheme, or
- Land is shown as reserved for a public purpose in a proposed amendment to a planning scheme.
Private land is often reserved for public purposes through the application of a Public Acquisition Overlay (PAO). To make a claim, the right to compensation must first arise. Common triggers include:
- A responsible authority refusing to grant a permit for land use or development on the grounds that the land may be required for a public purpose.
- An owner selling land at a lower price than reasonably expected if the land had not been reserved or proposed to be reserved.
Key Changes Proposed by the Bill
The Bill introduces several changes to streamline and clarify the process for claiming compensation under the P&E Act. Key reforms include:
- Prescribed Form for Compensation Claims
- Claims must be submitted using a prescribed form.
- Supporting evidence specified by the relevant Minister must accompany the claim.
- Interest Awards on Compensation
- Claims referred to the Victorian Civil and Administrative Tribunal (VCAT) or the Supreme Court of Victoria can include an award of interest in addition to compensation.
- Calculation of Interest
- Interest will only be calculated for the period between the referral date and the payment date.
- Rate of Interest
- The interest rate will be set by the Governor in Council based on a recommendation from the relevant Minister.
- The Minister’s recommendation will ensure the rate is:
- Compensatory in nature.
- Reflective of a fair market rate and the opportunity cost of money.
What Does This Mean for Landowners and Occupiers?
If your land is affected by a Public Acquisition Overlay or if you are considering triggering a compensation claim, it is essential to understand how these changes may impact you. Seeking legal advice can help clarify your position and ensure compliance with the new requirements.
Why These Changes Matter
The proposed reforms aim to make the compensation process more transparent and equitable, aligning with fair market principles. By formalising the claim process and clarifying interest calculations, the Bill seeks to balance the interests of landowners and planning authorities.
Get Expert Advice
For owners and occupiers of land affected by planning schemes or proposed amendments, navigating the compensation process can be complex. Our Compulsory Acquisitions Team is here to help. Contact us today to learn how these legislative changes may impact your rights and entitlements.
