Apartment owners forced to sell their units under new strata laws could lose hundreds of thousands of dollars in a controversial West Connex style value gap, it has been claimed.
Shadow Minister for strata issues, Yasmin Catley, says home owners should be given what they would have accepted if they had willingly sold, and has accused the government of covering up its true intentions with “obfuscation and spin”.
Ms Catley says civil servants had prepared detailed answers to 20 questions she tabled in parliament about forced strata sales, only to get a “read my speech” response from Innovation and Better Regulation Minister Victor Dominello.
Now Mr Dominello has exclusively revealed to Fairfax Media that he is going back to the drawing board on the process for estimating the market value of properties, to ensure the figure better reflects the value of the property with a development plan in place rather than a normal sale.
“The NSW Government will be consulting with stakeholders soon regarding highest and best use that will assist in determining property valuations,” he said.
Under new strata laws due to come into force on at the end of the year, 75 percent of owners in an apartment block will be able to compel the other 25 percent to sell their units, most likely to a developer hoping to demolish the block and build more apartments selling for higher prices.
While the law says owners forced to sell must be compensated by amounts “above market value”, that will be determined by the same procedures used for government projects such as the West Connex motorway extension, where home owners have complained they haven’t been given enough to allow them to purchase in the same area. Says
“The Just Terms Compensation Act is only one element that will be used to calculate compensation for a homeowner,” Mr Dominello added. “Ultimately the Land and Environment Court will need to be satisfied that the proposal is just and equitable in all the circumstances.”
He explained that if someone with a $500,000 dollar apartment was forced to sell it for $600,000 but it would cost $700,000 to relocate to a similar property in the same suburb, the LEC might decree this was not fair or equitable.
Ms Catley had asked, in 20 questions tabled in parliament, if compensation paid to an owner forced to sell their home shouldn’t be for the price for which would have willingly sold it.
She then discovered that Mr Dominello was given detailed advice by civil servants to the 20 questions she tabled but instead he responded by saying the answers were in his speech for the second reading of the strata Bill.
“This is a Government that hides answers from the public for one reason – because they can,” Ms Catley told Fairfax. “I asked a series of detailed questions on behalf of strata owners worried about the impacts these new laws will have. All we got in return was a snub and spin.
“The Minister knows his new laws will undermine the security of many strata owners – yet he will resort to covering up advice from the public service in an attempt to hide the truth.”
Mr Dominello said all he wanted was for the Opposition to go back to the source of the “most consulted’ piece of legislation in NSW history.
“The reason we referred Ms Catley to the second read speech is because it provides comprehensive details of the government’s strata reforms, including the information requested,” Mr Dominello told Fairfax.
“Rather than provide Ms Catley with information that is already publicly available, referring back to the original source seemed more appropriate.”
Under freedom of information previsions, the Shadow Minister requested access to the memos and emails used in the preparation of the response.
“She found that civil servants had taken time to carefully answer each of the 20 questions,” a spokesman for Ms Catley told Fairfax. “But it seems that the detail, even down to using expressions like ‘anxious buyers and sellers’, was too much for the Minister – who replaced the detailed answers with the ones on the public record.”