UK: Beware HS2 Cometh - Forearmed Is Forewarned

Last Updated: 14 August 2012
Article by Richard Flenley

In the first part of this two part series, we highlight the current state of play as regards progress with the Government's planned implementation of HS2 and also highlight key considerations for interested parties (whether currently affected or potentially affected landowners) in terms of compulsory purchase compensation.

In part two (which will be published in a future edition) we will focus on the utilities and rail network infrastructure considerations that will form an intrinsic part of the Government's plans.

For the uninitiated, and with the exception of the Crossrail project, HS2 represents the first major rail infrastructure project since the development and construction of the "Eurostar" train link between the United Kingdom and mainland continental Europe in 1994 (which was then known as HS1); the idea being that it will create a "Y" shaped high speed rail network linking London to Birmingham, Manchester, the East Midlands, Sheffield and Leeds.

The total cost of the project is estimated to be in the region of £32 billion. There is still a great degree of cross parts to HS2, and if Crossrail is anything to go by, this resistance will continue for a protracted period. However, with the announcement of the proposed route this will already be affecting values and business decisions in relation to the properties affected. Every time a new large scale public scheme is initiated, there is an automatic possibility that there will be a blight on the property values along the route. Some businesses relocate, the number of voids rises and the properties still being used are often depressed as a consequence of the voids (in business and value).

Progress

The key behind the proposal is to construct HS2 in stages, the first stage being between London and Birmingham. Whilst the Government has expressed its commitment to following through the plans for whole network, it is only the first stage that so far has any clarity to it.

After a protracted consultation process (which ran from essentially the start of 2009 until January this year), the Government finally announced its decision to proceed with the first phase of HS2 and specified that construction would take place in two phases: phase 1 would run from London to the West Midlands line with a link to Europe via HS1 and phase 2 would extend the line to Manchester, Leeds and Heathrow Airport.

In support of this plan, the Government released a proposal map showing the proposed route for phase 1. Details of this route can be found at http://highspeedrail.dft.gov.uk/inyour- area.

As part of this announcement the Government also indicated a proposed timetable for delivery of stages 1 and 2. The key parts of this are set out below:

Spring 2012

Commencement of public consultation on the proposed blight scheme (more of which below). Consultation with statutory bodies on the safeguarding zone for phase 1.

HS2 Limited (the special purpose vehicle set up by the Government for the delivery of the project) to advise the Government on phase 2 route options.

Engagement programme along phase 1 route on Environmental Impact Assessment issues, which will enable an Environmental Statement to be produced.

Autumn 2012

New blight scheme and safeguarding zone scheduled to be in place. Engagement programme on phase 2 preferred route to discuss local views and concerns.

Spring 2013

Consultation on Environmental Statement for phase 1.

End of 2013

Planned introduction of a hybrid bill in the House of Commons to provide necessary powers to construct and operate phase 1 of the railway.

Early 2014

Consultation on preferred route for phase 2.

Late 2014

Government to account the chosen phase 2 route.

Around 2016

Construction of phase 1 scheduled to commence.

2026

Phase 1 schedule to be completed and open.

2032-33

Phase 2 expected to be completed and open.

We are therefore at a very early stage in the overall process and, in all reality, some 2 to 3 years at least before the Government is likely to commence the process of taking control of the land it requires to carry out the construction.

That said, it is clear that now that the route for phase 1 has been announced, there are likely to be significant implications now, particularly for current landowners, tenants and other occupiers of properties situated along, or adjacent to, the route. There are also likely to be implications for those parties contemplating or actually acquiring interests also affected by the proposed route.

We are therefore firmly of the view that any such parties should be reviewing their position now to get ahead of the game and to make sure that they are not caught short by leaving it too late to take proactive action.

Key Considerations

We have therefore highlighted below some key considerations that we advise are looked at now:

  • Now that the route has been published, we recommend that fresh valuations are obtained to establish current market value and also to obtain professional valuation views as to whether or not the mere announcement of the route has had a marked impact on the value of the relevant property interest.
  • If there is a marked impact already and the relevant interested party has a need to resolve the position now (rather than wait for the potentially more advantageous schemes to come later) then they should consider whether they qualify under the exceptional hardship scheme. If they do qualify then they may be able to request that the Secretary of State buys their property.
  • If there is no such qualification then there will come (i) the usual Compulsory Purchase Compensation regime following the making of a Compulsory Purchase Order (which is not likely to happen for some time) and (ii) compensation for blight (under the Land Compensation Act 1961). This can potentially be pursued now but is more likely to be a feature after Autumn this year when the HS2 specific enhanced blight scheme is due to be in force.

When it comes in the enhanced blight scheme is likely to make it easier for the landowner to require the Government to purchase the relevant property and that will incorporate a raft of compensation measure that will be triggered at various stages through the planning/construction process.

  • If properties are being acquired now in the affected areas then full consideration will need to be given to the potential hazards with such acquisition, which of the compensation rights will be open and when, and whether in the circumstances it is prudent to carry out the acquisition.

David Haines (Partner and Head of Charles Russell LLP's Compulsory Purchase team) says:-

"although construction is not due to start until 2016, land assembly will be starting at a much earlier date and the impact of HS2 is already being felt by some clients. The key message is it is not too early to be taking advice if you own or occupy property or are considering acquiring property that will be affected by the HS2. Delay may have serious and unwelcome adverse consequences".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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