HS2 Property Consultation September 2014

My response to this consultation should be read in conjunction with all of my previous submissions in which I have clearly set out my views on how those who will suffer financial loss as a result of HS2 should be compensated. 

As I have said previously, a comprehensive compensation package is long overdue and I look forward to the Government finalising details shortly in order to bring some reassurance to many of my constituents whose lives have been blighted by HS2 for over four years. 

I want to see a compensation scheme that is fair to all of my constituents who are affected by the line. It is crucial for those who are trapped in homes of declining value through no fault of their own that they receive some assurance that should they want to move house, they can. I remain persuaded that a property bond is the most appropriate way to compensate those who live on or near the line of route and I refer to my submission dated December 2013.

The two new policies currently being consulted on are for owner occupiers of properties in rural areas close to Phase One of HS2. These policies are the ‘Alternative Cash Offer’ and the ‘Homeowner Payment’ and were announced by the Secretary of State for Transport in April following the HS2 Property Consultation 2013. The Secretary of State also launched the ‘Need to Sell’ scheme.

Blight

The HS2 Property Consultation 2013 recognised that ‘owner-occupiers’ properties are often both a home and a major part of the individual or family’s assets. Since generalised blight reduces the level of interest in properties close to the proposed railway and the prices that people are willing to pay for them, this interferes with people’s ability to move home when they need to’.  

As detailed in my previous consultation response this situation is unacceptable and will persist until Phase One of the scheme is completed in 2026 (or later) and any associated local property market recovery, unless the Government delivers a compensation scheme that mitigates the fear of financial loss that is associated with HS2.

The Alternative Cash Offer

The Alternative Cash Offer is intended to give owner occupiers living in the Rural Support Zone (between 60 and 120 metres from the line), who are eligible for the voluntary purchase scheme, a choice. They would be able to choose to sell their property to the Government and move on, or stay in their community and receive a lump-sum payment. The lump-sum would be a payment of 10% of the value of their property, to a maximum of £100,000 and a minimum of £30,000. Eligible property owners would be able to decide between these two options at any point until the voluntary purchase scheme is closed, one year after the opening of the railway. If an owner-occupier decided to accept a cash offer, it would not preclude them from applying to the Need to Sell Scheme at a later date if they had a compelling reason to sell their property, although the Government would recoup the payment under the alternative cash offer from the Need to Sell purchase price.

I recognise that this offer gives my constituents more choice. Previously, blighted homeowners had no alternative other than to sell their property or stay with no financial recompense.  This offer will provide an option to those who will suffer the impact caused by HS2 but wish to remain in their homes.    

I welcome any incentive for property owners to remain in their communities. Right along the line, towns and villages are threatened by the prospect of many individuals and families moving out of their communities and I am hopeful this proposal will stem the rush of people moving immediately. It may also help to reduce further blight caused by large numbers of vacant properties in an area.

In the village of Burton Green for example, it is clear that the viability of the local primary school will be compromised if young families move away from the area as a result of HS2.  

However, I do have a number of concerns about the Alternative Cash Offer. The Government must clarify if the lump sum payment is ten per cent of the un-blighted open market value of the property. In the interests of fairness and consistency, I hope the Government will apply this principle as in the Voluntary Purchase Scheme. The Government should also clarify if this one-off payment would be subject to tax.

In addition, I do not believe this scheme should be restricted to owner occupiers and it should also be extended to include properties located above or close to tunnels.  In cases where individuals have been forced to rent out their properties, their exclusion from this scheme is unnecessarily discriminatory.   

I therefore believe property owners, including of business properties, rather than owner occupiers should be eligible for this scheme.

With regard to properties located above or close to tunnels, I have previously argued that, despite being excluded from compensation, such properties are blighted and owners experience similar problems selling their homes as those close to the line where it is above ground.

The area in which the Alternative Cash Payment is available should also be extended to reflect the blight experienced more than 120 metres from the line. Eligibility criteria should be amended to allow more flexibility for property owners who are affected by differing landscapes and other factors and are not within the specified distance. I would also urge the Government to remove the £100,000 payment cap to reflect the value of all individual properties affected.

Homeowner Payment

The Homeowner Payment Scheme would offer a lump-sum cash payment to owner occupiers in rural areas living in properties between 121 and 300 metres from the railway line, with the exception of those above deep bored tunnels.  

The payments would be graded depending on how close the route is to the property, with owner occupiers receiving between £7,500 and £22,500.  

Owner occupiers located 121-180 metres from the line would receive £22,500, those between 181-240 metres from the line would receive £15,000 and those between 241-300 metres from the line would receive £7,500.

Property owners would only be eligible if they were owner occupiers of the property by 9th April 2014 – when the proposals for the Homeowner Payment Scheme were first announced. Payments could be claimed by the owner occupier at any point between Royal Assent of the HS2 Hybrid Bill and one year after the opening of the railway.

The sums offered do not, in my view reflect actual losses suffered and the start of the potential payment period is too far away.  Furthermore, the 300 metre distance is too short and arbitrary for a rural area. By their very nature rural areas are less accustomed to large scale construction projects and in the case of HS2 the effect of blight can extend much further than 300 metres from the route.  

Warwickshire County Council has suggested extending the line to 500 metres from the line, in recognition that properties in this wide zone will also suffer the impact of the construction phase through restricted access to services caused by road closures for example.  

As with the Alternative Cash Offer, I do not believe this scheme should be restricted to owner occupiers.  It should include all property owners, including business properties which are affected by the line.

This payment will not provide full compensation for several of my constituents. For example, one of my constituents, a widowed pensioner living 125 metres from the centre of the proposed line will be subject to construction blight including HGV traffic for seven years. My constituent’s property has been devalued by some 40 percent, equating to £160,000 and is unsaleable. Under this scheme my constituent would be offered £22,500 to compensate him for the loss he has incurred.  This is an inadequate sum and certainly does not reflect the blight he is experiencing now. My constituent will be in his 80s when the line is complete. His situation is not unique.

The Need to Sell Scheme 

Whilst the Need to Sell scheme is not subject to this consultation I will comment on the proposals, which I believe should have been included in the consultation.

I am concerned this scheme could be too restrictive, as its predecessor, the Exceptional Hardship Scheme, undoubtedly was.   

The interpretation given to the criteria used to determine applications under this scheme will be crucial.  The criteria could be interpreted widely (which I would welcome) or narrowly and a meaningful assessment of the merits of the scheme can only be made with clarity as to how this will be done.

I believe the Need to Sell scheme should be made available to anyone living along the line who can demonstrate that HS2 is having a negative impact on their life and their ability to sell their property. In most cases hardship rules have nothing to do with the blight suffered but concern a person’s circumstances and compensation should be connected to the loss of value and inability to sell rather than personal financial position.

We know that a significant number of households affected by HS2 hold a large percentage of their wealth in their home and are in the age group that will wish to sell and downsize within the next 13 years.

Limiting someone's ability to move house for a few months may be acceptable but limiting that ability for 13 years, while the line is being constructed is objectionable.  I believe an unduly restrictive hardship based scheme would do just that. 

I would therefore urge the Government to reconsider the introduction of a guarantee based property bond as advocated by the HS2 Action Alliance. Such a bond would ensure that if you cannot sell your home on the private market the Government will purchase your property at its un-blighted value. I firmly believe that if people have such a guarantee they will be much more inclined to stay in their communities for longer before reaching a decision on whether to go. 

Conclusion

I hope the Government will consider carefully the views of those who have responded to this consultation, the majority of whom will live along the route and have first-hand experience of the disruption caused.  

I look forward to the Department for Transport issuing its final compensation package shortly - it is long overdue.