Thanks again. Your post has highlighted that the formal process is slightly more involved that I first imagined.
I have only found out from our engineer that we need consent from the neighbours. I have not spoken directly with council about the form it would take. I was thinking that we would hold off the compensation until the works are completed to ensure their continued cooperation, but I did wonder what would happen if the neighbours sold in the meantime and we then had to deal with new neighbours. I was imagining that we would put the sewer in place and then the easement would be placed on it. It also did not occur to me that the bank's consent would be required (if applicable). However, you have set up the easement but not yet used it, which may be the way for us to go too. Do the terms of the easement then allow you access to their property to construct the infrastructure for which it was created, even if the property is later sold and you are dealing with new neighbours? I guess I need to talk to DERM about the process about creating the easement and how it all works.
I sent out one letter today by registered post and hand delivered another and spoke with the owners of the other property, who live nearby. This owner went to school with my father and has verbally given us the go ahead. I need to find out what documentation we need at this stage. (We are currently preparing the DA application, but the actual civil works are still a while off.) Only the corner of this property is affected, where there is currently a man hole. We may have been able to get away with no compensation, because the owners are known to the family, but we offered $500 as a gesture of goodwill. They will be happy about us having to remove the other neighbour's tree, because it has got into the sewer and has caused problems in one of the units.
In the letter to the other neighbour, which will require the sewer across the entire width, we have offered $2000 as a start, plus a new fence (which will be required by council anyway, but is still a benefit to the neighbour not to have to fund half).