Latest property news from BNP Paribas Real Estate UK, the leading property adviser
10 January 2012
HS2 is coming - are you prepared?
Today’s announcement by Transport Secretary Justine Greening confirms BNP Paribas Real Estate’s anticipated approval of the High Speed rail programme.
There are many hurdles for the project to overcome before implementation is assured but the political will is there and we are advising our affected clients not to be complacent, now that the Government has confirmed funding and its intentions to secure parliamentary powers.
BNP Paribas Real Estate’s consulting team has outlined a number of considerations that businesses, landowners and investors should be aware of in the wake of the Government’s decision to press on with the route from London to Birmingham.
Chris Selway, Director of Consulting at BNP Paribas Real Estate said: “Whilst I welcome investment in infrastructure and rail in particular, our focus will be to advise our affected clients and stakeholders who will be seriously impacted by the need to acquire land and rights compulsorily for the route of the high speed rail link. The consultation process for HS2 ended in July and detailed proposals will now follow, as HS2 must identify the land holdings to be ‘safeguarded’ for the scheme in planning policy and decision making terms along the entire route.
“Those who believe they are affected must act now to understand the process and identify how best to protect their interests. The future is still hard to predict but the omens are that HS2 is coming and we estimate that more than 60 significant business interests and associated properties will be directly impacted by the route”.
“It is imperative that those affected take professional advice to deal with the process. It is also essential for all affected owners and occupiers to re-assess their property strategy, maintain their property’s value and keep detailed records.
“The upside in property terms will be the investment potential and development opportunities to be considered in the new station hinterlandsand we are advising our clients accordingly.”
BNP Paribas Real Estate has identified the main concerns of landowners and occupiers affected by the route and how to address these –
1. We think our property is in the line of the HS2 route – what should we do?
Check your site by address / post code on the HS2 web-site route plans, and register online with HS2 for updates. Check with HS2 to confirm and consider requesting a meeting with the HS2 team to understand how the scheme affects your property and what HS2 propose in detail.
2. We are definitely affected - what should we do?
It is essential that your property is kept in good repair and decoration, all essential improvements or alterations are carried out and that property valuation for annual accounting purposes is undertaken appropriately. Businesses are free to transact until they receive formal notice to treat after HS2 secures parliamentary powers. Take professional advice on your position.
3. If HS2 does not proceed where does that leave us?
The Government asked for suggestions on blight in the Consultation document and may consider discretionary payments but there is no obligation to do so and no statutory basis for businesses to recover lost value or costs if no CPO occurs. Homeowners and small businesses may be able to claim under HS2’s Exceptional Hardship Scheme.
4. If HS2 does proceed what compensation can we expect?
The basis of compensation is equivalence; claimants are expected to be no better or worse off as a result of the scheme. The Compensation Code is complex but takes into account market value, disturbance, injurious affection, loss payments and costs. If a business has to be relocated or extinguished claims could be substantiated for such as loss of profits, plant machinery and equipment, redundancy or relocation costs; acquisition of alternative premises and fit out costs.
5. Our property won’t be acquired but is close to the route - will we be compensated?
Section 10 of the Compulsory Purchase Act 1965 provides for the depreciation in property value as the result of the executionof the works whilst Part 1 of the Land Compensation Act 1973 provides for depreciation due to physical factors arising from the useof the scheme. Compensation will be provided on a ‘before and after’ basis but HS2 are designing in mitigation and attenuation measures.
6. Is the Government thinking of support for affected businesses?
Yes, they have given early reassurance that fair compensation will be paid; and once the safeguarding consultation begins, statutory blight provisions will be made for qualifying claimants. Ideas on minimising blight and guaranteeing compensation levels by such as a bond were put forward during the consultation process last year. It remains to be seen if the government comes up with any novel ideas for minimising the impact of general blight.
7. Will HS2 find us an alternative property?
HS2 have no obligation to relocate affected businesses but this can be the subject of a disturbance claim or could be implemented by HS2 if the hybrid bill includes powers to acquire land outside the scheme limits for such purpose.
8. We were planning for redevelopment - should we continue?
Generally speaking yes, but it is essential to contact HS2 and inform them of your plans. However you must consider the cost of amending your scheme to accommodate HS2.
Planning policy will take full account of the route once it has been safeguarded so it is important to take advice and appropriate action now. ‘Twin tracking’ of applications may be needed to establish the basis of lost value in accommodating the scheme.
9. Will there be property opportunities if HS2 is built?
Yes - the government seems determined to see HS2 implemented, and the Chancellor gave further commitment to rail investment in last year’s Budget as part of the ‘Plan for Growth’. As the scheme progresses through the parliamentary process the positive effect on property values in the hinterland of the proposed new termini is sure to follow.
10. Where will the opportunities be?
HS2’s London terminus would be a redeveloped Euston station serving both high speed and conventional lines. From Euston the route will go to a new interchange station at Old Oak Common in North West London; a direct link to HS2 would also run from the main high speed line at Old Oak Common. In Birmingham the terminus will be situated at Curzon Street, close to the city centre and office quarter. BirminghamInternationalAirport will also be directly served from London with a journey time of just 38 minutes.