HS2 Compensation

HS2 like all other major infrastructure projects has and is having a detrimental effect on the value of properties along the likely route of HS2. 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’

HS2 is casting a shadow of blight over whole areas including land beyond what is likely to be the actual route of HS2. This is largely due to the fact that the detailed of the actual route has not been finalised – so far only the areas and towns through which the line will pass, have been identified.

Properties may be blighted for years before any final decision has been made as to the exact route of HS2. Until the route of HS2 was clarified and the areas ‘Safeguarded’ , the blight suffered by properties in the affected areas was ‘Generalised Blight’ and as such did not qualify for compensation.

HS2 –Safeguarding

HS2 Ltd has defined the potential route of HS2 and opening the way for compensation for Statutory Blight.. Known as ‘Safeguarding’ the provisions mean that the Local Authorities within the defined areas must gain HS2 Ltd approval on all planning applications within the area.

Not all of the HS2 route has been safeguarded – only a strip around 60 metres either side of the proposed route of Phase 1 (London to Birmingham) with consultation over the safeguarding of Phase 2 ( Birmingham to Leeds and Manchester) on going.

Although an area is safeguarded it does not mean that HS2 will definitely be built through that area as the ‘High Speed Rail (London-West Midlands) Bill has yet to complete its passage through Parliament.

Once an area is safeguarded, the properties within the area may qualify for the Statutory Blight provisions and as such will qualify for compensation.

Statutory Blight Notice (‘SBN’)

Now that the areas have been safeguarded the property owners within these areas may serve a SBN on HS2 Ltd and asking them to purchase the property.

There are conditions that must be satisfied before a SBN can be served on HS2 Ltd:
  1. ‘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.
  2. 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.
  3. 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).
  4. Once the property owner has served a SBN on HS2 Ltd, whether or not compensation will be paid out, will be discretionary and each case is considered on its individual merits.

    A property owner cannot serve an SBN on HS2 Ltd for only part of the property it must be served in respect of the whole of the property. In the case of a farm or an estate, the landowner may serve a SBN in respect of that part of the farm or estate affected, but HS2 Ltd may not accept the SBN if not all of the land is rquired for the construction or use of the HS2 line.

    If HS2 Ltd accept an SBN they will be obliged to buy the whole of the property for its full market price (discarding the blight factor). In addition to the full market value, HS2 Ltd are required to pay an additional home loss payment (capped at 10% of the property value to a maximum of £47,000.00) and a reasonable contribution to moving costs and professional fees.

    Properties within the HS2 Safeguarded Zone

    Those properties that are wholly or partly within the Safeguarded Zone do not have to issue a SBN as HS2 Ltd will serve notice on them informing them that their property is likely to be compulsorily purchased after the ‘High Speed Rail (London-West Midlands) Bill has been passed ( anticipated to be 2015 at the earliest). ,h4>Properties outside the HS2 Safeguarded Zone Owners of properties outside the HS2 Safeguarded Zone are not entitled to serve SBNs on HS2 Ltd. The only scheme of compensation open to these properties is the Exceptional Hardship Scheme (‘EHS’).

    The criteria to qualify for EHS is very prescriptive: Applicants have to be able to prove that they have exhausted all reasonable efforts to sell their property but have been unable to obtain any offers within 15% of the unblighted market value. The property owners failure to obtain an offer on their property must be due to the proximity and resultant impact of the proposed HS2 railway line.

    If a property owner is unable to have an application for compensation accepted by HS2 Ltd, their only alternative is to wait until one year after the HS2 railway line has opened and is in operation. These claims can only be made on the basis of the loss of value in the property due to the physical factors such as noise, dust, vibration, fumes and disruption caused by the operation of HS2. Property owners will not be able to claim for loss of amenity, diminished enjoyment of the property or loss of view due to the operation of HS2.

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