The Policy sets out what is required of Victorian Government agencies when they buy, sell or lease land. It also sets out what is required when agencies provide compensation under the Land Acquisition and Compensation Act 1986 and Part 5 of the Planning and Environment Act 1987.
The Guidelines provide information and guidance to assist agencies to comply with the Policy's requirements.
The Policy's requirements apply to:
- Victorian Government departments;
- public statutory authorities;
- legal entities established under State legislation for a purpose of the State (including those independent of government control);
- companies in which the State has an interest; and
- organisations, other than councils, which require statutory authorisation and/or ministerial approval, especially where public funds are involved in a land transaction.
The Policy and Guidelines replace the Victorian Government's Policy and Instructions for the purchase, compulsory acquisition and sale of land (Instructions), which were adopted by then-Minister for Planning, the Hon John Thwaites MP, in August 2000.
The Instructions were intended to ensure that Victorian Government agencies adopt 'a consistent best-practice approach to their property transactions.'
Introduction to the Policy
The core elements of the Policy are consistent with the old Instructions. Agencies generally must not sell any land at a price less than its current market value, or buy any land at a price greater than its current market value. For this purpose, agencies must obtain valuations from the Victorian Valuer-General (VGV). Agencies also require the approval of the Victorian Government Land Monitor (VGLM) for any transaction (or group of related transactions) where the value of that transaction is $750,000 or more. There are a range of procedural requirements for the sale of land. Agencies generally may only sell land through a public process, and must provide clear information to prospective purchasers as to potential uses to which the land may be put.
Key differences from the old Instructions
The Policy and Guidelines introduce some important changes, and provide greater clarity or renewed emphasis about particular matters.
First, the Policy now regulates leases. Agencies may only grant or acquire leases or other interests in land at market rental value or better, as determined by the VGV. An agency also must not grant a lease of land which contains an option to purchase, unless the lease is granted to another government agency. However, the Guidelines exempt significant categories of leases (at section 10.2). The Policy also does not apply to licences.
Secondly, the Policy places clearer assurance obligations on agencies to ensure that all transactions are conducted to achieve accountability and transparency. In relation to accountability, the Guidelines state that an agency must ensure that:
- it has the legislative power to undertake the land transaction;
- it has obtained all necessary approvals to proceed with the transaction;
- appropriate delegation is in place where it is proposed an authorised officer of the agency approve and execute the transaction; and
- roles, responsibilities, authority and accountability of agency officers involved in the transaction are clearly articulated and well understood.
In relation to transparency, land transactions must be supported by processes that provide evidence of transparency of actions, equity in dealings, confidentiality, probity assurance and management of conflicts of interest.
Third, the Policy and Guidelines provide more detailed guidance on the requirement for agencies to conduct an appropriate level of due diligence. Prior to the disposal, acquisition or lease of land, agencies must conduct an appropriate level of due diligence to ensure they are fully informed of the status and attributes of the land. The depth of due diligence required will vary from transaction to transaction, but the Guidelines cover the following areas:
- legal (specifically, ownership of and authority to deal with the land, and any encumbrances on the land);
- public land values (in respect of Crown land);
- contamination and pollution;
- cultural heritage; and
- Native Title and Traditional Owner Rights.
The Guidelines provide a helpful due diligence checklist in Appendix 1, to assist agencies in becoming fully informed as to the status and attributes of the relevant land. Appendix 2 contains a VGLM checklist, to assist agencies in deciding when to seek approval or assistance from the VGLM.
Fourth, the Policy sets out clearly the circumstances in which it does not apply to particular transactions. The Policy provides a list of exempted transactions in section 2(d).
A full copy of the Policy is available on the website of the Department of Environment, Land, Water and Planning at http://www.dtpli.vic.gov.au/property-and-land-titles/valuation/government-valuations/government-land-monitor. We understand that the Department of Environment, Land, Water and Planning and the VGV will be promoting the Policy and Guidelines in coming months.
In the mean time, if you would like further advice on the new Policy and Guidelines, please contact:
Managing Principal Solicitor
Acting Managing Principal Solicitor
Land Acquisition, Planning and Environment Team
Managing Principal Solicitor