MP’s concerns over level of HS2 compensation for homeowners

MP’s concerns over level of HS2 compensation for homeowners


Nigel Adams MP welcomes new proposals for compensation for HS2 neighbours – but says amounts need to be sufficient to cover loss in property values for home owners close to the proposed line.

In a recent consultation about compensation for those living close to the line of HS2, Nigel Adams submitted a comprehensive reply which commented on the detail of the proposed scheme proposed as well as the basic structure. He welcomed the fact that alternative schemes were being proposed but expressed concern about the conditions attached to the schemes and the amount of money, which in some cases might fall short of the loss in property value.

Nigel said:

“While I welcomed the concept and intended purpose of the Alternative Cash Offer proposed for people living within 120metres of the line, I was not satisfied that the amount would provide fair compensation to people living very close to the line. There were also restrictive conditions that would prevent the homeowner taking advantage of the Voluntary Purchase Scheme at a later date if their circumstances changed.”

The other scheme that was consulted on was for a single payment to be made to homeowners whose homes are between 120metres and 300 metres from the line. This scheme would potentially apply to more people, especially in this constituency and the concern here was that the payments were not linked to actual loss and that the scheme only applied as far as 300metres from the line, whilst properties beyond this distance could also suffer losses in value.

The consultation closed on 30 September.

The full text of the response that Nigel Adams submitted is set out below. Note that the consultation concerned Phase 1 of HS2 from London to Birmingham (Phase 1) but while this is not close the constituency of Selby and Ainsty the expectation is that any compensation schemes that apply to the first Phase would also apply to Phase 2, including the East Coast Mainline link running close to the West side of Church Fenton. For that reason I made the following submission.

Please find below my response to the consultation about the “Alternative cash offer” and the “homeowner payment” for Phase 1 of HS2.

This response is submitted in response to representations made to me by my constituents who will be impacted by Phase 2 of HS2 and who are concerned that the proposed schemes could be applied to the second phase as well as the first. The responses to the two questions are as follows :-

Q1. What are your views on our proposals for the alternative cash offer?

1. The concept of the scheme is fully supported. Without this scheme anybody who was concerned about loss of property value would be obliged to sell their home and move away in order to be compensated. This scheme running in parallel with the Voluntary Purchase Scheme (VPS) would enable those who did not want to move to continue to live in their property and to receive some compensation.

2. If the alternative cash offer is to meet its social objective of maintaining stability in communities within 120 metres of the track centre line the level of compensation should be at least as attractive as the VPS which enables the property owner to recover the full market value of their property (as it would be if the route of HS2 had not been close to their property).

3. The scheme should be available to all owners of residential or mixed use residential and business property within the 120metre distance.

4. The choice between VPS and the “Alternative cash offer” (ACO) must be finely balanced if the scheme is to achieve the objective of maintaining stability within the affected communities.

5. The two schemes will run in parallel for 10 or more years and during this time there will be considerable change. Any homeowner who accepts the ACO would be exposed to unknown risks including those linked to any social changes that will occur within the community. If they accept the ACO they should still be able to apply for the VPS at a later date, but receive a lesser amount so that it is not made attractive to accept the ACO and then switch to the VPS later.

Taking these points together the ACO is supported in concept but I would like to see a number of changes made to the structure of the offer.

6. ACO Payment should be linked to actual loss and not set to an arbitrary 10% of property value. A recent report by Hamptons shows that property within 500metres has fallen by an average of 6.9% versus an average rise out to 5 miles of 11.2% – a differential of 18.1% based on property out to 500metres. Those within 120metres would be expected to have lost more than those at 500metres. On this basis the 10% of property value is unlikely to match the loss in property value and will not be attractive unless there are exceptional reasons for not wanting to move.

7. There is no logic in the £30K minimum payment and a £100K maximum. Higher value property might be expected to lose more so there is no logic in capping the maximum amount to £100,000. Equally there is no logic in having a minimum payment of £30,000 which would be 30% on a property valued at £100k. This bias to low value properties would not achieve the objective of maintaining stability in the affected communities because all the occupiers of the more expensive property would opt for the VPS while those in low value properties would be biased to accept the ACO.

8. It will not be possible for people who opt for the ACO to foresee how the community will evolve and how their own circumstances may change. Accepting the ACO should not exclude them totally from the VPS at a later date, although there should be some penalty, which could be in the form of an administration fee and repayment of the ACO for switching at a later date.

Q2. What are your views on our proposals for the homeowner payment?

The sums range by distance from the line: £22.5k (120-180m); £15k (180-240m); £7.5k (240-300m).

1. The scheme is welcomed because it recognises that people living in the range from 300metres to 120metres from the centre of the track will not see any benefit from the scheme.

2. There is a basic inconsistency in that the scheme is not presented as compensation and yet is distance linked. If the “sharing of benefits” argument was to be taken to its logical conclusion everybody in the country who is not to benefit directly by being near to a station should also qualify for a homeowner payment.

3. The stated objective of the scheme – para 3.1.2 of the consultation document is “enable people in these areas to share in the benefits of HS2, as it would run near them but will not provide them with a direct benefit”. However the consultation document does not recognise that the concern of people living between 120metres and 500 metres is loss of property value and that their concern is that they be compensated for that loss. This scheme does not address the issue of loss of property value and is not a compensation scheme, and as such fails to provide protection for communities in proximity to the line.

4. While the scheme is not presented as a compensation scheme I make the following comments on how it is being received by my constituents who are directly affected and who are concerned by loss of property value which in many cases is greatly in excess of the sums offered as a “direct benefit” as it is described in para 3.1.2.

5. The impact on property value depends on many factors and if those living close to HS2 are to gain a net benefit and scheme should protect them from losses. Factors which should be taken into consideration are

a. Distance from the line

b. Value of the property

c. Visibility of the line and topology – the impact of the line on a viaduct is far greater than in a shallow cutting.

6. The payments are unlikely to make good the losses of property value that have been experienced by people living close to the line and there is nothing on offer to people living beyond 300m, who could still see substantial loss.

7. There is no logic in fixed sums for fixed distance ranges and no consideration of property value. The system will not be seen to be fair and will certainly not be seen as being full and fair compensation.

8. Why would a property at 181metres receive £7500 less than one at 179 metres.

9. A payment of £22,500 to a property with a market value of £100,000 is likely to overcompensate the owner for any loss. But a property with a former value of £1Million could see a loss in value running into £100,000 and this scheme fails to address that loss.

10. The “Behavioural insight sessions” are welcomed but the constitution of the panels should include people who are directly affected by the schemes so that the people who are directly affected have a major input into the design of the scheme.

11. In summary this proposal requires much more granularity and needs to address loss of property value.