8 hot tips for dealing with compulsory land acquisition

1. Understanding the process. In New Zealand a ‘requiring authority’ can acquire private land for the purposes of public works. A requiring authority may be a Minister of the Crown, local authority, water service provider or network utility operator. In respect of a large project, the requiring authority typically acts in two stages:

• In the first stage, it reserves the land required for the public work, under the Resource Management Act (RMA). It does so by issuing a ‘Notice of Requirement’ for a proposed designation of land. A process follows by which a decision on the proposed designation is made. If confirmed, the designation is recorded in the district plan. Once the land has been reserved by way of designation there are restrictions on how the land may be used. The designation can be in place for years or even decades, whilst the requiring authority waits for funding or makes a final decision on whether the public work will proceed.

• In the second stage, the requiring authority, having decided it will proceed with the public work, takes steps to compulsorily acquire all the properties required for the work under the Public Works Act (PWA).

2. The initial approach. The requiring authority often approaches landowners prior to issuing a Notice of Requirement to give notice of its proposals and consider any feedback. This is usually the first time affected landowners discover that their property may be required for a public work.

3. Notice of Requirement. The first formal step by the requiring authority is the Notice of Requirement. This starts a process by which owners may make submissions on the proposed designation, a decision on the designation is made, and owners may appeal that decision to the Environment Court. Under the RMA, once a Notice of Requirement is issued a landowner may apply to the Environment Court for an order requiring that the authority acquire the land, for full market value, under the PWA. This is known as an ‘early acquisition’. The main criteria for early acquisition are that the applicant owned the land at the time of the Notice (or designation) and they have been unable to sell the land for full market value.

4. Do I stay or do I go? Therefore, once a Notice of Requirement is issued landowners have a choice.

• They can apply for an early acquisition. This options suits owners who do not wish to remain in a property with a diminished value (which may restrict their ability to mortgage the property), who do not wish to have the uncertainty of not knowing when the public work may proceed and when they may be forced to leave (for example in the middle of children’s schooling), or who were intending to sell but do not wish to sell on the open market for a reduced amount.

• They can remain in the property and wait for the project to proceed. This option suits owners who wish to remain in the property as long as possible and are not concerned by uncertainty as to when they may be required to leave.

5. Early acquisition process. The first step in the early acquisition process is for the owner to put the property on the market, normally for 3 months, to establish it is not possible to obtain full market value by way of public sale.

The second step is for the owner to apply to the Environment Court for an order for early acquisition. This typically results in an order being made, with the consent of the requiring authority, within about 3 months. If the requiring authority does not consent, the Court process will take longer.

The third step, once the order is granted, is for the owner and requiring authority to negotiate the purchase price, with the assistance of valuers. If agreement cannot be reached, either party may apply to the Land Valuation Tribunal for a determination.

6. Entitlements upon early acquisition. There are a number of entitlements due to the landowner upon an early acquisition. As well as payment of full market value without any real estate commission, owners are entitled to:

• Compensation for legal and valuation costs, moving costs, losses on repayment of a mortgage and any relevant business losses.

• Where only part of a property is acquired, loss in value of the remaining land.

• Additional compensation of up to $50,000 (depending on the use of the property and personal circumstances).

• Under the Public Works (Critical Infrastructure) Amendment Act 2025, if the property is to be used for a “critical infrastructure project” (listed in Schedule 2A of the Act) an owner who obtains an order for early acquisition is, instead of the $50,000 additional compensation, entitled to a ‘recognition payment’ of 5% of the value of the land capped at $92,000.

7. Waiting for project to commence. The alternative to early acquisition is waiting for the project to be confirmed and for the requiring authority to approach the owner to acquire the land under the Public Works Act. This approach may occur about 1-3 years before construction is due to commence. The requiring authority normally approaches the landowner on an informal basis to reach an agreement on the acquisition. If agreement is not reached on an informal basis, the requiring authority will serve notice on the owner of its desire to acquire the land under section 18 of the PWA. There is then a 3-month window for the parties to negotiate an agreement, failing which the requiring authority may take formal steps to acquire the property including a notice of intention to take the land under section 23 of the Public Works Act.

8. Entitlements upon compulsory acquisition. The landowner’s entitlements upon compulsory acquisition under the PWA include those referred to at no.6 above. In addition, under the Public Works (Critical Infrastructure) Amendment Act, if the land is being acquired for a critical infrastructure project listed in Schedule 2A, and the owner agrees to the sale without the requiring authority having to take formal steps to acquire the land (and other conditions being met), the owner is entitled to an incentive payment of 15% of the value of the land capped at $150,000 (in addition to the 5% recognition payment). Again, if the parties cannot agree on the full market value or other entitlements, either party may apply to the Land Valuation Tribunal for a determination.

Grimshaw & Co regularly act for property owners affected by public works and obtain orders for early acquisition from the Environment Court. Contact us for a free consultation and specialist advice.