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HS2 and Compulsory Purchase

14 March 2012 #Real Estate


On 10 January 2012, the Secretary of State for Transport announced the government’s long awaited decision on its proposals for High Speed 2 “HS2”.

Phase 1 of HS2 will connect London directly to the West Midlands, and will include a connection to Europe via the existing HS1 line.  Phase 2 will eventually extend the line to Manchester and Leeds.

Legislation is required to enable the compulsory purchase of the land for the HS2 route and its construction.  The government is working on a hybrid bill setting out the land requirements for Phase 1 and the powers required to construct and run the line.  Given the impact of the scheme on local communities, the bill will contain additional measures to help affected land owners and businesses.

Existing compulsory purchase legislation provides that owners are compensated in the event their land is compulsory purchased.  When dealing with land for which there is a general market or demand, compensation is based on the market value of the land – the basic principle of compensation is that the owner is fairly and fully compensated for its loss.  The value of the land is based on what the land might be worth if it is sold by a willing seller to a willing buyer at the best price it could reasonably achieve in the open market.

Where only part of an owner’s land is required for compulsory purchase, the owner will be entitled to receive compensation for the loss of the land being purchased and, in addition, compensation for the depreciation of value of the retained land, that is, if the value of the land is reduced as a result of the compulsory purchase.

Compensation can also be sought if a right, attaching to the land, if taken away or interfered with, or if the land has to be vacated as a result of the compulsory acquisition.  Certain requirements must be met in order for someone to be eligible to make a claim.

Following the public consultation of the HS2, the following broad additional measures have been announced:

  • A sale and rent back scheme to give homeowners within affected areas more flexibility.  The scheme would allow homeowners to obtain an open market value for their property under the existing compensation legislation and pay a market rent in order to remain in occupation until the property is needed for construction.
  • A streamlined small claim scheme will be introduced for construction damage enabling individuals and businesses to claim compensation more quickly and easily.
  • In cases where homeowners need to sell urgently, a new hardship based property purchase scheme will be introduced.  The scheme will enable owners who need to move more urgently to request that the government purchases their property for the value their property would have been worth had it not been for HS2.  The scheme will be constructed along similar lines of existing schemes but will introduce different criteria.
  • A package of measures is being introduced to reinforce confidence in properties located above the proposed tunnels.  The measures include impact assessments, surveys to be undertaken before and after the construction of the tunnels, compensation for the compulsory purchase of subsoil and a legally binding agreement that HS2 will be responsible for any related settlement or subsidence issues.

It has been long recognised that the existing compulsory purchase legislation is in need of modernisation.  Although the additional measures announced recently benefit only those affected by HS2, it is hoped it will eventually lead to the reform of compulsory purchase law in general.

If you would like to discuss any of the above issues, please contact our Real Estate team on 0118 958 5321.

 

Clarkslegal, specialist Real Estate lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Real Estate matter please contact Clarkslegal's real estate team by email at realestate@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Simon Ralphs

Simon Ralphs
Partner

E: SRalphs@clarkslegal.com
T: 020 7539 8049
M: 0779 900 7323

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