Warning on 'low-ball' land grab

Lawyer Adina Thorn says owners are denied the opportunity to have the value of their properties tested by the open market. Photo / Jason Oxenham

Amount public bodies pay to buy properties for infrastructure and roading projects is below true value, says one lawyer

A lawyer has warned Auckland property owners about selling their real estate to public bodies, saying "low-ball" valuations are depriving people of the real estate's true worth.

But a chief at Auckland Council Property, where about $100 million has been spent on real estate this year, says it is dealing with people in a frank and fair manner and is neither paying too much nor too little.

Adina Thorn, principal of her own inner-city law firm, said many private properties were needed for big infrastructure and roading projects and she cited the Auckland Manukau Eastern Transport Initiative, Central Rail Link and Te Atatu Rd, Lincoln Rd and Dominion Rd upgrades. But she contends prices offered for properties were often less than their true value.

"It's often perceived that land owners having property acquisitioned are being paid handsomely for their land. Reality is that acquirers are looking to drive down prices. Owners are having their hands forced and obviously are denied the opportunity to have the value of their properties tested by the open market," she said.

Clive Fuhr, Auckland Council Property manager of acquisitions and disposals, disagreed.

"We try very hard to be fair. Our role is to pay people fair compensation. We're not trying to chivvy them down," he said, citing one Pakuranga property assessed as worth $520,000 but where $680,000 was initially sought by the owner and her lawyer.

"A lot of it hinges on independent valuers' advice and we invite and pay for the other party to get independent advice," he said, saying that some cases still went to the Ministry of Justice's Land Valuation Tribunal.

Thorn stood by her warning.

"Whether it is Auckland Transport, Auckland Council Property, New Zealand Transport Authority or local council, they are coming in with low-ball valuations," Thorn said. "I have not seen a valuation from an acquirer that is not lower than the owner's independent valuation. In one instance the difference in valuations between the council and the owner's valuer is above 30 per cent. In that case it is nearly $400,000.

"We acted for the owner of a property on Pakuranga Rd. The house was a well presented two-bedroom brick and tile unit, but was unique in that it bordered the estuary. The original valuation for Auckland Transport valued the property at $520,000. An independent valuation report placed the value at $600,000. Following extensive negotiations and the involvement of a third value they reached $600,000 - 15 per cent above the original AT valuation.

"Owners should be aware that they are entitled to independent expert advice under the Public Works Act. This extends to legal advice and obtaining an independent valuation."

In another example cited by Thorn, Auckland Transport sought to acquire a 60sq m "corner slice" to make room for a flyover.

"Valuers were engaged to determine the level of compensation in the absence of any finalised plans for the exact positioning of the flyover," she said.

"In other words, the flyover could potentially be placed so close to the house that would have such a significant impact on the property valuation and liveability that it should be purchased outright. How can Auckland Transport seek to acquire property without full understanding of the project, and thus the injurious affection for the property owner?"

Fuhr said negotiations over that property alongside the Pakuranga Highway were about whether partial or full purchase was made. Property owner Angie Jian said her place sold and did not respond to questions about the process.