A nettle that has not been grasped

To recap on where I got to at the end of my blog Matters of principle (posted 31 Oct 2013), the first question that we are invited to address for the Property Compensation Consultation 2013 is:

“What are your views on the criteria we have put forward to assess options for long-term discretionary compensation?”

In that blog I also listed out the five criteria, as identified by the Government in Section 3 of the consultation document, and it is probably most convenient to consider them in reverse order.

The fifth criterion is “functioning of housing market”, which is explained as:

“… the Government should enable local residential property markets to function as normally as possible during the development and construction phases of the project.”

Now I think that it is fair to say, without being accused of exaggeration, that property markets along the length of the proposed HS2 route for Phase 1 have been far from normal since the route corridor was announced in March 2010. A study undertaken for HS2 Ltd confirms this (see footnote):

“Our research found that the housing markets in areas next to the proposed route have weakened since the announcement. Generally we found that in these areas house prices and sales volumes have fallen since the announcement.”

Behind this fairly bland statement lie the stories that many of us have heard of houses for sale failing to attract any buyer interest, very large drops in market value and the truly shocking case of a house that was valued at £0 for mortgage purposes (see this news item).

It is clear that the Phase 1 Exceptional Hardship Scheme has done, at best, very little and probably nothing at all to improve this situation, and to be fair that was not, I feel, the purpose of the scheme. However, what is equally clear is that the Government’s long-term compensation proposals are on too small a scale to tackle the problem either. We know from the answer to a written House of Commons question (Cheryl Gillan MP [171087], 16^th October 2013, Column 722W) that there are around 211,000 properties within 1 mile of the surface sections of the Phase 1 line. It is not unreasonable to surmise, from feedback from communities along the Phase 1 route, that a goodly proportion of these properties may be at risk of blight. In contrast the number of properties that stand to benefit from the Government’s compensation proposals is tiny; in my blog A little bit more (posted 14 Jan 2013) I reported an estimate of 750 properties that stand to benefit from advance purchase (excluding those that are required to be demolished for the project) and in Crossing the line (posted 16 Jan 2013) I gave a figure of 813 properties that could be in line for voluntary purchase. Of course, these figures relate to the previous consultation and we can expect the properties that may qualify for voluntary purchase may be slightly higher now that the new rural support zone is a little larger than the voluntary purchase zone that it replaces.

It is unlikely that the proposed option of a property bond would add appreciably to the numbers receiving compensation, assuming that the Government will follow the advice from Deloitte and restrict the scheme to properties within the rural support zone. It is clear that the properties that the Government is prepared to help remain a tiny proportion of those that may be experiencing blight. It is inconceivable therefore that the degree of intervention envisaged by the Government will have any perceptible effect on the “functioning of [the] housing market”; the Government’s proposals simply do not satisfy its own criterion.

The fourth item in the list of criteria that the Government claims underlie its policy on compensation is “feasibility, efficiency and comprehensibility”, which is explained as:

“… the Government should devise clear and easily explained rules so that homeowners can readily understand their entitlements and the Government can predict how costs will be determined in any individual case. It is important also to have assurance that any scheme can be administered efficiently and effectively to provide good customer service for those whose property is affected by the railway.”

Well the proof of how well the Government’s efforts will do when tested against this criterion can only be determined when this particular pudding is subjected to the taste test. The auguries do not look entirely favourable, I must say. The Exceptional Hardship Scheme (EHS) has been characterised by lack of clarity regarding the application of the qualification criteria and its operational has been, to a large extent, shrouded in secrecy. The intention appears to be to morph the EHS into the long-term hardship scheme largely without addressing these shortcomings, and the other proposals in the consultation document are not free from examples of ill-defined concepts either.

In my next posting I will consider the three remaining criteria in the Government’s list.

Footnote: The statement is taken from the Executive Summary of the document High Speed Two Blight Study, C B Richard Ellis, December 2010. The use of postcode sectors to group data for the report means that the definition of “next to the proposed route” encompasses an area that, on average, “runs 2.29km either side of the proposed railway line” (refer to Appendix 4 of the report).