Like it or loath it, High Speed 2 (“HS2”) is becoming a reality and the impact on our region of the largest transport infrastructure scheme for a generation will be profound.
Construction of the line is due to start in 2017 and be completed by 2025. The first train services will run between London and Birmingham from 2026.
HS2 will link 8 of Britain’s 10 largest cities, serving 1 in 5 of the UK population. According to the government, the new railway will treble the number of seats on trains into Euston and almost double the number of trains per hour on the West Coast Main Line.
HS2 will have major consequences for property owners and occupiers. Land may be permanently blighted by its proximity to HS2 and many properties may be disadvantaged by the HS2 construction works and the resultant noise pollution.
Owner-occupiers, potential buyers, tenants or lenders in the affected areas need to be aware of the HS2 proposals and check whether or not their land is affected (directly or indirectly) by HS2. The compensation schemes proposed by the government vary depending generally on proximity to the line and the relevant Phase of the HS2 scheme.
After many months of uncertainty about the type and scope of the government’s compensation schemes available for those blighted by the HS2 project, the position is now a little clearer.
Introduction to the schemes
The government announced the go ahead for the HS2 project in January 2012.
It then announced in the 2013 Queen’s speech that legislation would be introduced to enable the building of the HS2 railway line, and in November 2013 the government published the “High Speed Rail (London-West Midlands) Bill” which proposes to grant the powers required for the construction of the line.
The Bill grants the authorisation necessary for construction works to be undertaken by HS2 Ltd (the nominated undertaker) and provides the government with the necessary legal powers to compulsorily acquire land through which the line will travel.
The compulsory purchase powers cannot be exercised until the HS2 Bill has received Royal Assent (expected in 2016).
Construction of Phase One is due to begin in 2017, with completion scheduled for 2025.
The Express Purchase Scheme
This scheme will accept blight notices from eligible owner-occupiers of residential, agricultural or (in certain circumstances) commercial property. Personal representatives can also apply. An owner-occupier will be entitled to sell their property to the Government for its full un-blighted value as if the HS2 project did not exist. In addition, they will be entitled to a top-up “home loss payment” equal to 10% of the open market value of the property (up to a maximum of £49,000). Applicants will also be entitled to be compensated for reasonable moving costs, surveyors’ fees, legal fees and removal costs. Where a blight notice is accepted and the Government makes an offer to buy, the owner-occupier will have three years with which to accept it. To be eligible, the surface safeguarded area must cover at least 25% of an affected property. If the surface safeguarded area covers less than 25% of the property, the owner-occupier will not be eligible for compensation unless the land is required for the construction of the line. An owner occupier must: Be the freeholder or a leaseholder with at least 3 years left on the lease Be living in or running a business from the property or have done so for at least 6 months in the last 18 months if the property’s currently empty The scheme is not available for properties located over deep-bored tunnels. A link to the proposed schemes can be found here. Rent back alternative Alternatively, for those properties purchased using the Express, Voluntary or the Need to Sell schemes to be rented back to the owner-occupier under a Crown tenancy agreement. The property will then be let for an initial term of six months at full open market rent. The rent-back scheme will only be available in instances where renting the property represents value for money for the taxpayer.
The Voluntary Purchase Scheme
This scheme applies to eligible owner-occupiers in rural areas whose properties are outside the ‘surface safeguarded area’, but up to 120 metres from the proposed route of the line. Those affected will be able to ask the Government to buy their property at its full unblighted open market value. The open market value will be assessed by two independent valuers. A link to the proposed schemes can be found here. Rent back alternative Alternatively, for those properties purchased using the Express, Voluntary or the Need to Sell schemes to be rented back to the owner-occupier under a Crown tenancy agreement. The property will then be let for an initial term of six months at full open market rent. The rent-back scheme will only be available in instances where renting the property represents value for money for the taxpayer.
The Need to Sell Scheme
This scheme is to replace the existing exceptional hardship scheme. The scheme is intended to assist those with properties outside the surface safeguarded area but who nonetheless have a compelling reason for needing to sell (but who cannot do so on the open market due to the HS2 project). This is likely to be the most contentious and uncertain of all the schemes available. Applicants need to show they cannot sell because of the HS2 project and will need to apply to have their individual circumstances considered by an independent panel. Successful applicants will have their property purchased for the unblighted open market value where they can establish the following to the satisfaction of the panel: They are an owner-occupier of a residential property or a “reluctant landlord” (a property owner forced to let their home); They can show evidence that HS2 has an adverse impact and/or effect on their property; Their property must have been marketed (without success) for a minimum of three months; Their property must have been purchased before 11 March 2010 (being the date on which the preferred route for the line was announced); They can show another compelling reason to sell. To do this, one of the following reasons must be established: unemployment; job relocation; division of assets pursuant to a divorce; ill health; the need to release capital for retirement. A solid case will need to be constructed by the applicant and we would recommend that professional help be sought to maximise the chances of success. A link to the proposed schemes can be found here. Rent back alternative Alternatively, for those properties purchased using the Express, Voluntary or the Need to Sell schemes to be rented back to the owner-occupier under a Crown tenancy agreement. The property will then be let for an initial term of six months at full open market rent. The rent-back scheme will only be available in instances where renting the property represents value for money for the taxpayer.
The Alternative Cash Offer
As an alternative to the voluntary purchase scheme, this scheme is aimed at owner-occupiers in rural areas. These owner-occupiers in rural areas are those who would qualify for the Voluntary Purchase scheme (ie. who live within 120 metres of the proposed route of the line), but who prefer to stay in their homes despite their proximity to the line. Applicants can apply to receive a lump sum cash payment equal to 10% of the un-blighted market value of their properties (being a minimum of £30,000 and a maximum of £100,000).
Home Owner Payment Scheme
This proposal is for eligible owner-occupiers whose properties are located between 120 and 300 metres from the HS2 line. Applicants may apply for compensation which varies depending on the proximity of the property to the line: 120 to 180 metres from the line: £22,500 180 to 240 metres from the line: £15,000 240 to 300 metres from the line: £7,500
Exceptional Hardship Scheme (Phase 2)
You may be able to sell your property to the government at its open market value as if HS2 wasn’t going to be built (known as ‘unblighted’ value). If all of the following apply: you live in a property near to the proposed Phase 2 HS2 route you haven’t been able to sell your property at its market value because of HS2 you bought your property before 28 January 2013 you need to sell your property urgently otherwise would suffer ‘exceptional hardship’, eg you need to move to work The Need to Sell Scheme has replaced the Exceptional Hardship Scheme for Phase 1, between London and the West Midlands.