review of land values in jordan springs east · review of land values in jordan springs east 6 4.0...

Review of land values in

Jordan Springs East December 2020

Valuer General NSW

Table of contents

1.0 Executive summary ................................... 1

2.0 Context ....................................................... 3

3.0 Review method .......................................... 5

4.0 Findings ..................................................... 6

5.0 Conclusion ................................................. 9

Acknowledgments ......................................... 10

Appendix 1 ..................................................... 11

Appendix 2 ..................................................... 29

Review of land values in Jordan Springs East 1

1.0 Executive summary

The aim of this review is to analyse the impact of localised excessive settlement issues on

land values in the Jordan Springs East area to determine if the Valuer General’s 1 July 2019

and 2020 land values require amendment. This review is substantially based on information

provided by Lendlease (developer of the Jordan Springs East Subdivision) which is

assumed to be factually correct. Should it be subsequently shown not to be the case, Valuer

General NSW reserves the right to withdraw this report. It is noted that Penrith City Council

have advised Valuer General NSW that it does not concur with Lendlease’s advice.

Accordingly, Valuer General NSW will continue to monitor the market in the Jordan Springs

East area and conduct a further review of land values if the market evidence changes.

Affected landholders in possession of information differing from that considered in this report

are encouraged to contact Valuer General NSW.

In February 2020, Penrith City Council issued notations to planning certificates on 195

properties located in Jordan Springs East following evidence of localised excessive

settlement damage within the subdivision (Initial Notation). On September 28, 2020, a

planning notation was added to the planning certificates for an additional 646 properties

(being properties with no current evidence of excessive settlement damage) and replaced

the Initial Notation on the 195 properties referred to above (Current Notation) giving a total

of 841properties subject to notation. Both the Initial Notation and the Current Notation make

statements to the effect that some parts of Jordan Spring East contain fill of low relative

compaction and some parts have experienced settlement.

Extensive media commentary has speculated on the potential extent of adverse impact of

the Current Notation on improved capital value and land value for the 841 properties with

the Current Notation. This report addresses land value of the 841 properties with the Current

Notation and the properties in the balance of Jordan Springs East at 1 July 2019 and 2020.

To assess the impact of the localised excessive settlement on the land value of 841 noted

landholdings, Valuer General NSW has:

• identified potentially impacted properties through consultation with Penrith

City Council;

• consulted with Lendlease regarding its Voluntary Compensation Scheme

and other relevant matters;

• reviewed sales evidence in the impacted area; and

• noted the approximate costs provided by Lendlease for additional footings

or appropriate structural solutions (measured against a lot with an H1 lot

classification) to enable a dwelling to be built in accordance with the

relevant Australian Standard.


To assess the relevant impact, Valuer General NSW has considered four categories of

landholding as advised by Lendlease:

• properties within the Jordan Springs East Precinct without the Current Notation (No Notation Properties);

• properties within the Jordan Springs East Precinct with the Current Notation which are not experiencing Eligible Damage (as defined below) (Unimpacted Properties); and

• properties within the Jordan Springs East Precinct with the Current Notation which are experiencing (or which it is reasonably anticipated may experience) Eligible Damage (as defined below) (Impacted Properties); and

• the remainder of Jordan Springs East (Remainder of JSE).

Following a review of sales in Jordan Springs East, which comprised Unimpacted

Properties, it was generally found that

• there is no evidence of a decrease in capital values of improved

properties; and

• there is insufficient market evidence to determine the impact on land

value for Impacted Properties.

It is concluded that the 1 July 2019 and 2020 land values of properties in Jordan Springs

East be changed based on the known level of localised excessive settlement issues and

estimated valuation impact of land as follows:

Property category Land value change

No Notation Properties No land value change

Unimpacted Properties No land value change

Impacted Properties Reduced by an amount of $25,000 (in

the absence of any other

information).

Remainder of Jordan Springs

East

No land value change


2.0 Context

In February 2020, Penrith City Council issued an Initial Notation following concerns

regarding localised excessive settlement within the Jordan Springs East subdivision. The Initial

Notation advised that the properties may be constructed on fill of low relative compaction.

On 28 September 2020, the Current Notation was added to an additional 646 properties and

replaced the Initial Notation that had been placed on 195 properties, giving a total of 841

properties subject to the Current Notation.

The Valuer General is required to value all land in NSW annually to reflect the property

market as at 1 July in the valuing year. The valuation is also required to reflect the physical

condition of the land at the date the valuation is made. Residents in Jordan Springs East are

currently paying rates based on their 1 July 2019 land value.

Accordingly, for fairness and equity, the Valuer General should reflect the impact of localised

excessive settlement which was known at 1 July 2019 (prospective, being before the Initial

Notation) and 1 July 2020 (known for the issue of the Initial Notation and prospective for the

Current Notation).

Extensive media commentary has speculated on the potential extent of adverse impact of

the Current Notation on improved capital value and land value for the 841 properties with

the Current Notation. This report addresses the land value of the 841 properties with the

Current Notation at 1 July 2019 and 1 July 2020.

In June 2020, Lendlease entered into a Voluntary Compensation Scheme with the

Commissioner for Fair Trading. Relevant to Valuer General NSW’s consideration of the

value of a hypothetically vacant parcel of land, certain owners with vacant land which

requires any additional support (measured against a lot with an H1 lot classification) to

ensure that a dwelling can be built in accordance with the relevant Australian Standard are

entitled to receive the costs of the reasonable additional construction costs of footings or

appropriate structural solutions from Lendlease pursuant to that Voluntary Compensation

Scheme (Structural Solutions Amount).

The aim of this review is to analyse the impact (if any) of localised excessive settlement on

land values in in the Jordan Springs East area to determine if the 1 July 2019 and 2020 land

values require amendment.

It should be noted that this review is substantially based on information provided by

Lendlease which is assumed to be factually correct. Should this be subsequently shown not

to be the case, Valuer General NSW reserves the right to withdraw this report. It is noted

that Penrith City Council have advised Valuer General NSW that it does not concur with

Lendlease’s advice. Accordingly, Valuer General NSW will continue to monitor the market

in the Jordan Springs East area and conduct a further review of land values if the market


evidence changes. Affected landholders in possession of information differing from that

considered in this report are encouraged to contact Valuer General NSW.

2.1 Voluntary Compensation Scheme Lendlease has advised that it has entered into a Voluntary Compensation Scheme with the Commissioner for Fair Trading. This was entered into in June 2020 and was developed in consultation with the NSW Building Commissioner, David Chandler.

While the general terms of that Voluntary Compensation Scheme are confidential, Lendlease has advised that its broad features are as follows:

(a) The Voluntary Compensation Scheme imposes binding obligations on Lendlease with respect to a range of different offers which are required to be made to different categories of owners at Jordan Springs East, depending on the lot classification of their property, whether the property has experienced “Eligible Damage” (see below), whether the property is vacant or has a home built on it, the expected performance of the home in future and a number of other relevant factors.

(b) Broadly speaking, any owner with property which experiences “Eligible Damage” for up to 15 years – being damage caused by settlement that a geotechnical engineer appointed by Lendlease has assessed as being greater than would be expected for building supported on footing systems designed and constructed in accordance with AS2870-2011 - will be supported by Lendlease in one or more of the following ways:

(i) an offer to buy-back the land and improvements at the higher of actual cost or market value (as determined by an independent registered valuer ignoring any settlement issues and ignoring the Current Notation) plus all incidental costs (such as stamp duty, conveyancing and moving costs); or

(ii) compensation including a repair undertaking for up to 15 years.

The undertaking provided by Lendlease is transferable to new owners of the relevant property, in accordance with its terms.

Originally, these undertakings were only available to homes which were more likely to experience Eligible Damage (around 90 homes). However, following the imposition of the Current Notation to properties which Lendlease believes are unlikely to be impacted (based on expert geotechnical advice), Lendlease extended these undertakings to all properties subject to the Current Notation, generally other than where owners had already accepted an offer under the original terms of the Scheme.


Relevant to Valuer General NSW’s consideration of a hypothetical vacant parcel of land, certain owners with vacant land which requires any additional support (measured against a lot with an H1 lot classification) to ensure that a dwelling can be built in accordance with the relevant Australian Standard are entitled to receive the costs of the reasonable additional construction costs of footings or appropriate structural solutions from Lendlease pursuant to the Voluntary Compensation Scheme (Structural Solutions Amount).

As a result, under the Scheme, all owners of properties which experience Eligible Damage as a result of localised excessive settlement are supported by Lendlease.

3.0 Review method

To assess the impact of the localised excessive settlement on the land value of 841

properties with the Current Notation, Valuer General NSW has:

• identified potentially impacted properties through consultation with Penrith City Council;

• consulted with Lendlease regarding its Voluntary Compensation Scheme and other relevant matters;

• reviewed sales evidence in the impacted area; and • noted advice from Lendlease concerning the approximate costs of

the additional footings or appropriate structural solutions (measured against a lot with an H1 lot classification) to enable a dwelling to be built in accordance with the relevant Australian Standard.

To assess the relevant impact, Valuer General NSW has considered four categories of

land:

• properties within the Jordan Springs East Precinct without the Current Notation (No Notation Properties);

• properties within the Jordan Springs East Precinct with the Current Notation which are not experiencing Eligible Damage (as defined below) (Unimpacted Properties); and

• properties within the Jordan Springs East Precinct with the Current Notation which are experiencing (or are likely to experience) Eligible Damage (as defined below) (Impacted Properties) as identified by Lendlease; and

• the remainder of Jordan Springs East (Remainder of JSE).


4.0 Findings

4.1 Impacted properties

There are 841 properties with the Current Notation.

Penrith City Council have advised that the Current Notation appears on planning

certificates issued under s10.7 of the Environmental Planning and Assessment Act (NSW)

1997, providing advice to applicants for such certificates that there is evidence that parts

of the land within Jordan Springs East contains non-compliant fill and fill of low relative

compaction and that Council is undertaking an investigation in relation to the extent of the

issue.

In October 2020 Lendlease issued a media statement which indicated that:

• their investigations and expert advice had determined that the excessive

settlement issue is an isolated, localised issue, impacting around 90

houses in the Armoury Road area, rather than a precinct-wide issue;

• they have removed two houses;

• they have offered to repurchase a further 42 houses where damage

relating to settlement has occurred at a level considered to be inconsistent

with Australian Standards despite the homes remaining structurally sound

and safe to occupy; and

• at the date of the statement, approximately 20 owners had accepted their

offer.

Those lots with the Current Notation are shown in Figure 1.


Map of properties with planning certificate notations

Source: Penrith City Council

Figure 1

4.2 Sales evidence

A review of sales evidence in Jordan Springs East identified the following:

• there have been 41 sales from residents to Lendlease since November

2018. Of these 28 properties had houses and 13 were vacant land. Valuer

General NSW’s rating and taxing contractor has analysed 25 of these

sales (being 12 improved sales and 13 vacant sales) and the adjusted land

values were all above the issued 1 July 2019 and 2020 land values.

However, as these are buybacks, they do not meet the definition of market

value in Spencer and so do not provide a reliable guide to market impact;

and

• there have been four market sales of properties located in the area of the

195 properties subject to the Initial Notation since the notations were made

in February 2020 and one sale of a property in the extended area since 28

September 2020 being the date on which the Current Notation was placed

on properties. All sales were improved with houses and show adjusted


land values that support the 1 July 2019 and 1 July 2020 land values.

(Appendix 2)

While the impact of localised excessive settlement on Unimpacted Properties would appear

to be limited (if any), it is considered that there is insufficient sales evidence to show the

impact of localised excessive settlement on Impacted Properties.

The available market evidence does not indicate that there has been any significant impact

on the marketability or value of either the Impacted Properties or the Unimpacted Properties.

This may be the result of the relatively small number of sales which have transacted or the

market’s appreciation of the Lendlease Voluntary Compensation Scheme.

In the event that further market evidence becomes available in the future which indicates an

impact on value, that market evidence would be taken into consideration in the assessment

of Land Value for future valuation years.

4.3 Valuation approach to reflect subsidence

The sales evidence suggests limited (if any) impact from localised excessive settlement on

land value for Unimpacted Properties, despite the Current Notation.

As there is insufficient sales evidence to assess the impact of localised excessive settlement

on Impacted Properties, Valuer General NSW considers that a sale transaction in the form

envisaged by the Valuation of Land Act 1916 may be likely to reflect 2019 and 2020 land

value less an allowance for remediation costs.

In respect of the Impacted Properties, Lendlease is of the view that the likely current impact

on land valuation is represented by the Structural Solutions Amount, being an amount

generally in the range of $5,000 to $25,000. This represents the additional costs which a

purchaser would incur in footings or structural solutions had the purchaser bought the land

knowing the geotechnical conditions which related to the specific lot which they purchased.

Impacted Properties have been, or will be supported by Lendlease under the Voluntary

Compensation Scheme, in one or more of the following ways:

• an offer to buy-back the land and improvements at the higher of actual

cost or market value (as determined by an independent registered valuer

ignoring any settlement issues and ignoring the Current Notation) plus

all incidental costs (such as stamp duty, conveyancing and moving

costs); or

• compensation and a repair undertaking for up to 15 years.


The undertaking provided by Lendlease is transferable to new owners of the relevant

property, in accordance with its terms.

Accordingly, transactions in Jordan Springs East may now be expected to reflect both the

impact of localised excessive settlement and the Voluntary Compensation Scheme and such

transactions will form the basis for the 1 July 2021 valuation.

However, as at 1 July 2019 and 2020 (being the Valuer General’s dates of valuation)

localised excessive subsidence existed but existing owners and potential purchasers were

generally unaware of it. The Valuer General contends that, had potential purchasers been

aware, they would have reflected potential remedial costs arising from localised excessive

subsidence in their assessment of value.

5.0 Conclusion

The aim of this review is to analyse the impact of localised excessive settlement issues on

land values in in the Jordan Springs East area to determine if the 1 July 2019 and 2020 land

values require amendment.

The analysis found no sales evidence to justify amendment of the valuation of Unimpacted

Properties, despite the Current Notation.

Concerning the effect of settlement on Impacted Properties, Valuer General NSW considers

that a sale transaction in the form envisaged in the Valuation of Land Act 1916 may be likely

to reflect 2019 and 2020 land value less the Structural Solutions Amount (in the absence of

any other information), being an amount generally in the range of $5,000 to $25,000.

Following Dixon J’s decision in Commission of Succession Duties (SA) v Executor Trustee

Agency Co of SA Ltd (1942) 74 CLR 358 at 374:

I should like, however, to add for myself that there is some difference of

purpose in valuing property for revenue cases and in compensation

cases. In the second the purpose is to ensure that the person to be

compensated is given a full money equivalent of his loss, while in the first

it is to ascertain what money value is plainly contained in the asset so as

to afford a proper measure of liability to tax. While this difference cannot

change the test of value, it is not without effect upon a court’s attitude in

the application of the test. In a case of compensation doubts are resolved

in favour of a more liberal estimate, in a revenue case, of a more

conservative estimate.

Valuer General NSW has adopted an allowance of $25,000.


Accordingly, the review concludes that the 1 July 2019 and 2020 land values in Jordan

Springs East should be amended as follows:

Property category Land value change

No Notation Properties No land value change

Unimpacted Properties No land value change

Impacted Properties Reduced by an amount of $25,000 (in the absence of any other information).

Remainder of JSE No land value change

This report reflects the position as at 31 December 2020. Valuer General NSW will continue

to monitor the market in the Jordan Springs East area and conduct a further review of land

values if the market evidence changes.

This review is substantially based on information provided by Lendlease which is assumed

to be factually correct. Should this be subsequently shown not to be the case, Valuer

General NSW reserves the right to withdraw this report. It is noted that Penrith City Council

have advised Valuer General NSW that it does not concur with Lendlease’s advice.

Affected landholders in possession of information differing from that considered in this report

are encouraged to contact Valuer General NSW. Further, in the event that impacted

landholders are in possession of information, expert reports, evidence of costs of

remediation and so forth that differ from the basis of amendment shown above, such

landholders are encouraged to contact Valuer General NSW on 1800 110 038 or via email

at [email protected].

Acknowledgments

Valuer General NSW thanks Penrith City Council and Lendlease for the provision of information.

mailto:[email protected]


Appendix 1

Details of 841 properties provided by Penrith City Council:

1 17 Ashgrove Close JORDAN SPRINGS NSW 2747



















20 15 Garrison Road JORDAN SPRINGS NSW 2747














34 11 Lance Street JORDAN SPRINGS NSW 2747














47 8 Lance Street JORDAN SPRINGS NSW 2747 48 10 Lance Street JORDAN SPRINGS NSW 2747







55 38 Armoury Road JORDAN SPRINGS NSW 2747








63 3 Flotilla Circuit JORDAN SPRINGS NSW 2747






















85 3 Cavalry Street JORDAN SPRINGS NSW 2747

86 34 Cavalry Street JORDAN SPRINGS NSW 2747





90 42 Tedbury Road JORDAN SPRINGS NSW 2747




94 128 Tedbury Road JORDAN SPRINGS NSW 2747 95 130 Tedbury Road JORDAN SPRINGS NSW 2747


97 24 Regiment Street JORDAN SPRINGS NSW 2747





102 25 Bivouac Street JORDAN SPRINGS NSW 2747









111 15 Tannery Street JORDAN SPRINGS NSW 2747








119 4 Lieutenant Street JORDAN SPRINGS NSW 2747



















137 54 Epaulet Circuit JORDAN SPRINGS NSW 2747




141 62 Epaulet Circuit JORDAN SPRINGS NSW 2747 142 64 Epaulet Circuit JORDAN SPRINGS NSW 2747

















159 1 Brooklime Street JORDAN SPRINGS NSW 2747






























188 21 Lieutenant Street JORDAN SPRINGS NSW 2747 189 13 Lieutenant Street JORDAN SPRINGS NSW 2747









































230 13 Artillery Street JORDAN SPRINGS NSW 2747






235 3 Artillery Street JORDAN SPRINGS NSW 2747 236 34 Tedbury Road JORDAN SPRINGS NSW 2747




240 3 Radar Street JORDAN SPRINGS NSW 2747






















262 3 Argent Street JORDAN SPRINGS NSW 2747

263 18 Argent Street JORDAN SPRINGS NSW 2747

264 100 Wianamatta Parkway JORDAN SPRINGS NSW 2747



















282 2 Corporal Way JORDAN SPRINGS NSW 2747 283 111 Wianamatta Parkway JORDAN SPRINGS NSW 2747





288 18 Corporal Way JORDAN SPRINGS NSW 2747














302 6 Flynn Circuit JORDAN SPRINGS NSW 2747












314 4 Poynting Street JORDAN SPRINGS NSW 2747
















329 3 Poynting Street JORDAN SPRINGS NSW 2747 330 1 Poynting Street JORDAN SPRINGS NSW 2747




334 19 Qualmann Street JORDAN SPRINGS NSW 2747























357 21 Chaffey Street JORDAN SPRINGS NSW 2747




















376 108 Armoury Road JORDAN SPRINGS NSW 2747 377 106 Armoury Road JORDAN SPRINGS NSW 2747


379 39 Academy Street JORDAN SPRINGS NSW 2747










389 2 Charlie Street JORDAN SPRINGS NSW 2747







396 13 Bravo Street JORDAN SPRINGS NSW 2747




























423 7 Academy Street JORDAN SPRINGS NSW 2747 424 9 Academy Street JORDAN SPRINGS NSW 2747





















445 4 Infantry Street JORDAN SPRINGS NSW 2747


























470 56 Flynn Circuit JORDAN SPRINGS NSW 2747 471 58 Flynn Circuit JORDAN SPRINGS NSW 2747


473 19 Commander Street JORDAN SPRINGS NSW 2747
























497 17 Convoy Street JORDAN SPRINGS NSW 2747





















517 151 Armoury Road JORDAN SPRINGS NSW 2747 518 153 Armoury Road JORDAN SPRINGS NSW 2747







525 2 Commodore Street JORDAN SPRINGS NSW 2747




529 4 Squadron Street JORDAN SPRINGS NSW 2747





















550 4 Sailor Street JORDAN SPRINGS NSW 2747















564 7 Sailor Street JORDAN SPRINGS NSW 2747 565 9 Sailor Street JORDAN SPRINGS NSW 2747







572 51e Tedbury Road JORDAN SPRINGS NSW 2747

573 51d Tedbury Road JORDAN SPRINGS NSW 2747

574 51c Tedbury Road JORDAN SPRINGS NSW 2747

575 51b Tedbury Road JORDAN SPRINGS NSW 2747

576 51a Tedbury Road JORDAN SPRINGS NSW 2747

577 49e Tedbury Road JORDAN SPRINGS NSW 2747

578 49d Tedbury Road JORDAN SPRINGS NSW 2747

579 49c Tedbury Road JORDAN SPRINGS NSW 2747

580 49b Tedbury Road JORDAN SPRINGS NSW 2747
































611 27 Tedbury Road JORDAN SPRINGS NSW 2747 612 25 Tedbury Road JORDAN SPRINGS NSW 2747












624 1a Tedbury Road JORDAN SPRINGS NSW 2747
















640 2 Military Close JORDAN SPRINGS NSW 2747








648 29 Navy Road JORDAN SPRINGS NSW 2747











658 22 Navy Road JORDAN SPRINGS NSW 2747 659 24 Navy Road JORDAN SPRINGS NSW 2747


















677 5 Brigade Street JORDAN SPRINGS NSW 2747





























705 25 Navy Road JORDAN SPRINGS NSW 2747 706 27 Navy Road JORDAN SPRINGS NSW 2747

707 26 Private Circuit JORDAN SPRINGS NSW 2747







714 39 Cadet Circuit JORDAN SPRINGS NSW 2747









723 Lot 1307 Colonel Lane JORDAN SPRINGS NSW 2747






























752 4 Private Circuit JORDAN SPRINGS NSW 2747 753 6 Private Circuit JORDAN SPRINGS NSW 2747















































799 65 Private Circuit JORDAN SPRINGS NSW 2747 800 63 Private Circuit JORDAN SPRINGS NSW 2747

































833 13a Navy Road JORDAN SPRINGS NSW 2747







840 1a Navy Road JORDAN SPRINGS NSW 2747



Appendix 2

Market sales evidence in Jordan Springs East:

• 40 Cadet Circuit, Jordan Springs and sold on the 07/03/2020 for $675,000

improved with a house. The adjusted land value was $406,000 compared

to the 1 July 2019 land value of $370,000 and the 1 July 2020 land value

of $380,000.

• 6 Private Circuit, Jordan Springs and sold on the 12/03/2020 for $662,000



of $288,000.

• 13 Brigade Street, Jordan Springs and sold on the 7/07/2020 for $765,000



of $401,000.

• 14 Navy Road, Jordan Springs and sold on the 7/09/2020 for $680,000



of $318,000.

• 23 Squadron Street, Jordan Springs and sold on the 7/10/2020 for

$680,000 improved with a house. The adjusted land value was $366,000

compared to the 1 July 2019 land value of $350,000 and the 1 July 2020

land value of $360,000.


Copyright

© Crown in right of NSW through the Valuer General, 2020. You may copy, distribute and otherwise freely deal with this publication for any purpose,

provided you attribute the Valuer General as the owner.

Disclaimer Valuer General NSW has prepared this report for general information. You may wish to seek independent advice before making a decision based on this

information.

Author: Valuer General NSW

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