The cost of HS2 could well rise beyond current predictions due to a “property inertia” on the northern section of the route which is set to cost millions more than needed.
Land and property holders in the major cities affected by the second half of HS2 have signalled their willingness to sell their assets to HS2 – but officials have said they will have to wait until the planning process is further advanced before striking deals.
A leading national expert on compulsory purchase around major projects such as HS2 and Heathrow Airport believes the issue makes it impossible for the Government to say the project will hit its £57.5 billion budget.
Jonathan Stott, Managing Director of Gateley Hamer, said: “There is no question that this is a major issue. We alone represent a number of property owners in Leeds and Manchester, whose holdings are worth in the order of £30-£40 million.
“They are prepared to start the sales process now so that they can remove uncertainty and to plan for their business futures but HS2 is saying they are not yet in a position to do that.
“That is understandable to a degree as there are some serious legislative steps still to be taken before the northern route is 100 per cent certain to go ahead, but that is going to take time and ultimately cost more money as values rise.
“While those uncertainties exist, it makes it impossible for the Government to come out with the assurance that the project will hit the budget. No-one at this stage can say that, because there are still some considerable unknowns. What is clear from our experience is that the Government is not taking opportunities to save money by acquiring property early, even where owners are prepared to sell at a reduced cost.”
Stott said that the announcement of the proposed route from Birmingham to Leeds had settled several issues and one key measure should make it easier for home owners to realise the value of their properties.
“The confirmation that some parties may now ask HS2 Ltd to acquire their property through the Express Purchase scheme, rather than having to jump through the additional hoops that were required for the now-defunct Exceptional Hardship Scheme, is good news for those who qualify,” he said.
“Additionally, the limits of the Rural Support Zone (RSZ) and the three layers of the Homeowner Payment Zone (HPZ) have been reconfirmed as part of today’s announcement and again that will bring some level of assurance.
“However, the compensation schemes currently available only serve to help homeowners and owners of business premises with a rateable value less than £36,000. Owners of larger and higher value properties are left in a state of limbo, unable to sell or develop their properties. Unfortunately, rather than using compulsory purchase as a last resort, it seems HS2 are intent on waiting to use those powers, rather than buying properties by agreement and enabling owners to move on with their lives.”
Following today’s announcement people can now begin to identify whether they qualify for any of the existing discretionary compensation schemes, or whether and to what extent they may be compensated under the statutory Compensation Code in the future.
Stott said: “Transport Secretary Chris Grayling stated that communities affected by the railway would receive ‘appropriate support and are treated with fairness, compassion and respect’.
“Sadly, there is all-too-often a disconnect between the easy-to-give commitments offered by politicians and the reality on the ground and I suspect that to many of our clients affected by Phase 1 will feel those remarks are rubbing salt into the wounds as they will not recognise those sentiments from their own experiences to date. Hopefully lessons have been learned from earlier dealings with property owners.”