Last year, during the Exceptional Hardship Scheme consultation, HS2 Action Alliance researched different property blight schemes developed by a variety of organisations. This is what they have to say about question seven from the HS2 Consultation:
Q7. Do you agree with the options set out to assist those whose properties lose a significant amount of value as a result of any new high speed line?
We were promised a compensation scheme, but have only been offered options. HS2 Action Alliance support the Property Bond option, but it should be announced now, and should apply to all whose properties lose value as a result of the Government proposals for HS2.
On the Government’s approach to compensation:
- HS2 Action Alliance agree that people whose properties lose value because of HS2 should be compensated fully for their losses, but it is unjust if restricted to those suffering significant loss in value
- HS2 Action Alliance agree that it is essential that people affected or potentially affected are given reassurance that they will be fully compensated. The Government should therefore announce without delay that it will adopt such a scheme with the objective of providing full compensation. Delaying consultation on any scheme until 2012 does not provide the necessary reassurance
- HS2 Action Alliance agree the property market needs to continue to work as normally as possible – and for this to happen the financial institutions will need to support the selected scheme option
- HS2 Action Alliance believe people should be able to stay or move ie as they would have in the absence of HS2
- HS2 Action Alliance do not agree that Government acquiring properties should be a major negative factor that drives the choice of option. They can withstand losses and wait for market improvements more readily than individuals, being able to let or sell properties as they see best. Properties need not be left empty (but can be let or sold), unless construction temporarily prevents this.
Only the Property Bond option meets the needs of those affected by blight:
- The Bond based Property Purchase scheme, is the only option that provides a buyer of last resort at an unblighted price, when other private buyers would insist on a discount to compensate for imminent or occurant construction works, or for the many years of delay before compensation might be forthcoming (ie not until 2027 for phase 1 and after 2033 for the Y).
- A Hardship based option would leave the great majority of owners suffering loss in property value uncompensated, because they would not qualify. It would also not be a better scheme than those that have previously operated, as the Secretary of State said would be provided
- The Compensation Bond scheme would leave buyers – including those in desperate personal circumstances – forced to move facing major price reductions from the unblighted value to sell, as no one would willingly suffer the detriment for construction without compensation. That no compensation would be paid until a year after the railway is operating (in 2027 or 2033) ie after construction is complete, would leave buyers and lenders requiring a considerable discount from the unblighted value, to reflect that they might not remain owners long enough to benefit.
Only the Property Bond could gain the backing of financial institutions and provide the necessary stability for the property market to operate normally. This was proved by Central Railways.
The Property Bond has already been overwhelmingly supported once, in the 2010 consultation. It is based on private sector best practice, and was identified as the best way to deal with blight.