EHS – a detailed look at the proposals

Section 1: Purpose of Consultation

1.10  Route beyond Birmingham: when (or if) the government publishes plans to extend the proposed High Speed Rail link beyond Birmingham, it will use this scheme as a basis for an EHS for properties blighted by the extended route.  Everyone who would be affected by a change in route, or an extension of the route, needs to make sure that the scheme is as workable and as fair as possible.

It is worth looking at other ‘blight’ schemes, such as Central Railways and BAA Stansted.

2. The Proposals

2.2-2.3 Following public consultation, if the government decides to go ahead with the proposed High Speed Rail link, they will introduce the appropriate acts in Parliament – originally suggested for 2014.  These acts will also include the route beyond Birmingham, not just the London to Birmingham part.  At this point, property owners affected by blight (using definitions from the Town and Country Planning Act, 1990) will be able to ask the Secretary of State to buy their property.

2.4 – 2.6 At the moment, there is no statutory blight provision, so the Exceptional Hardship Scheme is being proposed as an interim measure – but it’s only for residential owner occupiers with “an urgent need to move”.  

2.7 Normal statutory provisions will apply later – but later is at least four years time. That’s a long period of uncertainty for most property owners.

2.8 “The Department for Transport would welcome views as to whether it should introduce an EHS ahead of decisions on whether, and if so how, to proceed with a high speed route?”

My answer – obviously they should introduce a scheme, but it should be fair, easy to understand and apply, and available to everyone who has property blighted by the proposals, or by the fear of the proposals.

2.9 The scheme – for residential home owners with an “urgent need to sell” – is much too restrictive.

2.10 What do they mean by “close vicinity” to the line?   

The blight caused by the line varies with the surroundings.  For instance, a train travelling at 400kph on a viaduct through open countryside (eg in the Vale of Aylesbury, maps 11-13) will have a much greater impact then the same train traveling at 250kph through a cutting in central London (eg map 3).  The faster train is likely to be more noisy and this noise will spread further, because it is being transmitted through the air, rather then being absorbed by the walls of the cutting and the other buildings in the area.

A fairer system would take this account.  One possibility would be to use sound contours – like the BAA scheme at Stansted – to decide which properties are within the boundaries of the scheme.

In addition, HS2 will completely change the ambience of some areas.  In an urban environment, the noise of the trains will be one of many man-made noises, along with the drone of road traffic, and the other sounds of town life.  Countryside dwellers have chosen not to live in that environment, preferring instead to live in a place where the loudest noises are natural.  A repetitive, frequent train noise (HS2 has said that at times there will be 28 trains an hour) will completely change the environment of the nearby countryside.

2.11 Properties directly above tunnelled sections should be included: there is a clear and obvious concern for potential purchasers about subsidence caused by the building of the tunnels and the operation of the trains afterwards.  HS2 themselves have said houses directly above tunnels will experience settlement during building of the tunnel.  (See http://www.camdennewjournal.com/news/2010/apr/cracks-high-speed-rail-vision )

2.12 All properties, should be included in the scheme.  This includes BTL properties, other businesses and farms.  (http://birminghamnewsroom.com/?p=10340 )

2.13  The hybrid bill will not be presented to Parliament until at least 2014: it is unreasonable to expect most property owners to wait that long before being able to sell their house.  In this country, people are allowed to move house without permission from authority, and this principle should be extended to this scheme – especially as it will be in place for at least four years.

2.14  The eligible circumstances are unnecessarily restrictive, and have some major omissions.

If one of the occupants dies, the house-owner will not be able to apply to the scheme.  If the only person living in the house dies, their executors cannot apply for the scheme.  They will have to pay the costs associated with property ownership (eg council tax), for an empty house they did not choose to own, and it may mean they cannot pay bequests to charities, or pay any inheritance tax due.  Even worse, it may lead to a terminally ill resident deciding to leave a house they have lived in for many years, – and the friends and neighbours who support them – so as to avoid these problems after they have died.

Also the scheme excludes couples who are getting divorced.  It excludes people who wish to downsize.  It excludes people who wish to move for their children’s education, or to be closer to their extended family.

One situation that can lead to unfairness  is where two neighbours who are made redundant from the same firm are treated differently: the one who already has debts can sell their house, but their neighbour with savings feels excluded because they are not under “extreme financial pressure”.   Another unreasonable circumstance is where a new resident of a nursing home may want to rent their old house to help fund their care home fees, but in doing so, they would be excluded from applying to the scheme later.

However adding a few extra situations to the list of circumstances is not the answer.  The scheme should include anyone who wants to sell their house, regardless of their circumstances.

2.15  It is reasonable that an individual should have made an effort to sell their property.  It is not reasonable to expect them to accept any offer.  Offers do not invariably lead to sales: sometimes the buyer drops out for reasons ranging from an inability to get financing, being unable to sell their current house, to simply changing their mind.  The way the scheme is currently written, the buyer removing their offer delay the property-owner from applying to the scheme.  Also, an estate agent would sometimes  recommend that the seller does not accept a specific offer, but the scheme would stop them from being able to offer their normal professional advice.  

Secondly, it is unreasonable to expect a seller to accept offers within an arbitrary price range.  The open market property price varies with time, and can change substantially over a quarterly period.  No-one can be expected to know what the market value of a property will be in three months time: therefore it is impossible to judge whether a particular offer is within 15% of the future value of the house.  

Further it is unreasonable to expect someone to incur a 15% loss in value of their house: for most people, it is their biggest asset.   For some, an 85% offer would be less then their mortgage. In the south-east, 15% of a house price is tens of thousands of pounds: on a £400K house – an average price in parts of Buckinghamshire – the difference is more then double the national average wage.

There is an incentive to accept a lower offer, because an individual has to wait before they apply for the scheme – it could be six months from the date of the offer before they are accepted.  But no-one should be forced to loose tens of thousands of pounds.

2.16  This is very difficult for an individual to prove.  Entire villages will be affected to blight, but this condition will allow the government to avoid buying any house in that community.

2.17  This condition will affect some types of house more then others.  For instance, people buying starter houses may anticipate selling within a few years, and hence will be discouraged from buying one near the proposed route.  If the EHS had some form of price guarantee – like in the BAA schemes – the housing market will operate more normally, as individuals will know that they can sell the house later and will not lose serious amounts of money.

2.18  “Do you agree with the proposed principles underpinning the proposed EHS? If not, what alternative arrangements would you propose, including specific criteria for determining qualification for the scheme? “

There are a number of flaws with the proposed scheme, as described above.

2.19 The first problem with the scheme operation is that there is no right for appeal.  

The second problem is that the requirements in 2.10-2.17 are not clear enough.  They could lead one person to assuming that they would not be eligible when they are.   They put too much onus onto the seller.   They are also too subjunctive: does “extreme financial pressure” mean the same as “expenditure greater then income, following a fall in income”, or does it just mean “verge of bankruptcy”.  If these criteria were simplified, then the work of the panel would be more straightforward, and also their decisions would be clearer to understand.

2.20 The property owner concerned should be able to select at least one valuer, and there should be a clear description of the process of deciding the value, if there is disagreement about it.

2.21 – 2.22  It is right that property owners should be able to apply immediately the scheme goes into operation: there is anecdotal evidence that the HS2 announcement in March had an immediate effect on property sales.  

2.23  One major aspect not included in these time scales is the time it will take from a property-owner agreeing to sell their property to the Secretary of State, to completion of that sale.  

It could easily be 6 months (or more) from when the property owner started to market the property, and a delay of many more months would be unacceptable.  In a situation where the property-owner has major debt problems, a delay here could push them into bankruptcy.  Alternatively, a long delay between agreeing a price, and completing the sale could mean that other house prices in the area have risen substantially – it is not uncommon for house prices to rise by 10% during a year.

Also, would the Secretary of State work with a house-buying “chain” to co-ordinate exchange of contracts and completion?

2.24  It is right that an individual should not be obliged to sell it to the Secretary of State.  However, as the government’s announcement on HS2 was the original cause of property blight, they should normally be expected to buy any eligible property: if for whatever reason they decide not to buy the property, the owner should be entitled to a clear explanation as to why the Secretary of State did not buy it, and given the right of appeal.

2.25 Do you agree with the proposed system for operating the proposed EHS? If not, what alternative arrangements would you suggest?

If the criteria for applying are simplified, then the scheme will be more transparent, and the decisions it makes will be more clearly understood.  At the moment they are opaque, and there is no means of appeal.

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