In a desperate attempt to catch up with the rest of the European Union, Highspeed 2(HS2) the onslaught of planned high speed link between London and the Midlands and the North continues.
The consultation on the route of HS2 is planned to take place this year (2014), and the line is expected to be built by 2033. Despite the fact that actual construction of HS2 has not yet began, HS2 is having a detrimental affect on property in those parts of the country through which HS2 is likely to pass.
Blight Caused by HS2
HS2 like all other major infrastructure projects has and is having a detrimental effect on the value of properties along the likely route. As always happens when major infrastructure projects are announced, the local property market has been affected by localised panic as property owners in the areas along the HS2 Route, rush to off load their property before the value drops too far. Properties in the areas along the HS2 route have become ‘Blighted’.
Property ‘Blight’ can come in two forms: Generalised Blight and Statutory Blight.
Generalised Blight (which affects properties near the HS2 route)
Generalised Blight is the term used to describe the effect on property in areas when the proposal for a major transport (or other infra-structure) scheme, such as HS2 is first announced. At this stage the precise route of HS2 is not announced, there is just a generalised proposal for HS2 indicating which areas are ‘likely’ to be affected by the scheme. The affect on the properties within the areas likely to be affected by HS2 is that the demand and therefore the value of the propeties begins to drop; purchasers and more importantly lenders are less inclined to buy or to lend on a property that may have a compulsory purchase order imposed on it at anytime in the next few years or which is affected by the increased traffic and noise that close proximity to the proposed HS2 scheme will bring.
This a particularly difficult time for the owners of the properties in these areas as they may not be able to sell their property and will not have any legal recourse against those that have caused the ‘Blight’ i.e. the Government or HS2 Ltd..
There is no statutory compensation for ‘Generalised Blight’) this because until a definite plan for the construction of the infrastructure project is completed ( for example, until the exact route of the HS2 is defined) there is no guarantee that any one property will be affected, as it is known for large infrastructure schemes, similar to HS2, to be planned for many years and then abandoned without anything happening, or the route being changed. In these circumstances, a property may be ‘Blighted’ for many years and then when it is decided that the scheme will not happen, the Blight is lifted, but there is no compensation for the difficult years in which the property owner in the areas affected by the threat of HS2 experienced financial difficulties due to being unable to sell the property; or for having to have sold at a loss.
Statutory Blight (which affects properties within the defined route of HS2)
Statutory Blight is where a property is directly affected by a major transport or infra-structure scheme such as HS2, and as such is under a very real threat of having a compulsory purchase order imposed on it. These properties are referred to by the Government and local authorities as being ‘online’ and are ‘statutorily blighted’.
The owner of a property suffering from ‘statutory blight’ can serve a ‘Blight Notice’ on the Local Authority or Highways Agency ( or in this case HS2 Ltd) forcing them to purchase the property at the current market rate. There are conditions that must be satisfied before a Blight Notice can be served:
- ‘Eligible Interest’ - The owner of the property must have an ‘eligible interest ‘ in the property. An eligible interest would be that of an owner-occupier, or the owner of a business with an annual rateable value not exceeding £34,800 per year or a owner-occupier of an agricultural unit.
- Statutory Provisions of the 1990 Act - The Statutory provisions of the Town and Country Planning Act 1990 (‘the 1990 Act’) would have to be triggered. The provisions of the 1990 act are triggered only once the Secretary of State has announced the preferred route of the scheme and published draft orders for the scheme.
- Efforts to sell the property must have been made – The owner of the property must show that they have made ‘reasonable’ efforts ( for at least three months) to sell their house and have been unable to do so except at a significantly reduced value ( a value less than 85% of the property’s market value).
Once the property owner has served a Blight Notice on, in this instance, HS2 Ltd, whether or not compensation will be paid out, will be discretionary and each case is considered on its individual merits. If it is clear that the property will be directly affected by the HS2 scheme, a Blight Notice will in most cases be accepted if the conditions above, are satisfied. Where it is deemed that the land on which the property is situated is either not needed for the scheme or only part of it is needs, HS2 Ltd or government (or in the case of H2, H2 Ltd) will challenge the Notice.
Blight Spreads Beyond the HS2 Route
The Government are in the process of introducing new Compulsory Purchase provisions which will be tailored to suit the needs of HS2. The new provisions are to contain powers for the compulsory purchase of any land which becomes economically viable as a result of HS2.
The parliamentary process for the introduction of the hybrid bill known as the ‘High Speed Rail (London-West Midlands) Bill’ which contains these provisions started with the first reading on 25th November 2013 and is widely believed to be without precedent in the history of UK government. The Financial Times give an example of one clause (clause 47) states that ‘if the government “considers that the construction or operation of the of phase one of HS2 gives rise to the opportunity for regeneration or development of any land’ it may acquire the land compulsorily.’ The implication is that the compulsory purchase powers to be invoked in the construction of HS2 are not limited either by area or time- the land in question could be anywhere in the parts of the country through which HS2 is likely to pass. This is likely to cause widespread blight as whole communities fear that their land may be at risk of being acquired by HS2.