Counting the pennies

(As the closing date for the compensation consultation, 4th December 2013, is fast approaching, I will increase the frequency of posting for the remaining blogs in this series to one every two days. This will mean that the final posting will be 26th November, which should allow time for responding.)

Question 3 for the Property Compensation consultation is, “What are your views on the proposed long-term hardship scheme?” and the supporting information is in Section 4.3 of the consultation document.

Except for one substantive change, which I will explain later in this blog, this penny-pinching proposal is unchanged from the scheme of the same name that was included in the original consultation – so it looks like we can all dust off the comments that we made then and just resubmit them with a few updates. However, one thing to be aware of is that this scheme was the subject of two questions (Question 4 and Question 5) in the original consultation, which have now been condensed into one.

Although the name will be changed, the scheme will be what amounts to an extension of the Exceptional Hardship Scheme (EHS) that is now running for Phase 1, with some small modifications. I outlined the rules for the Phase 1 EHS and how it operates in my blog Not exceptionally helpful (posted 8 Jan 2013). I hope that you will find this summary helpful, but please refer to the HS2 Ltd document HS2 Exceptional Hardship Scheme for Phase One: Updated Guidance and Application Form for definitive information, rather than relying on my interpretation.

In my blog Seen to be done? (posted 10 Jan 2013) I gave my reasons why I regard the EHS as having operated in a wholly unfair manner, and it seems apparent that the Government intends to operate the Long-term Hardship Scheme (LTHS) in a similarly unjust way. In my blog Finding it easy to say no (posted 12 Jan 2013) I looked at the numbers that have been helped by the EHS and the reasons given for rejecting applicants. Those that have been helped are significantly outnumbered by those that have been rejected, and the total of both is fairly insignificant when compared with the scale of the blight caused by HS2. I am sure that we can expect that the LTHS will have a similarly insignificant impact.

I reviewed the five qualifying criteria that will apply for the LTHS, as it was originally proposed, and compared them to the equivalents for the EHS in my blog Let them eat cake (posted 17 Jan 2013). As far as Criterion 1 is concerned, my January comments still apply. Whilst the explanation of Criterion 2 has been expanded, the application of the criterion does not appear to have been changed and the comments that I made in January still apply.

The explanation of Criterion 3 has also been expanded and one substantive change has been made, otherwise the application is unchanged and my January comments still apply. The substantive change that has been made is to reduce the minimum time on the market from twelve months to six. Criterion 4 is totally unchanged.

Some changes have been made to the text of Criterion 5 but these do not appear to change the way in which the criterion will operate and my January comments still apply.

In my blog Same as before? (posted 18 Jan 2013) I reviewed the proposals for operating the LTHS, which were the subject of a separate question in the original consultation. The latest proposals, outlined in the consultation document in the sub-section How would this scheme operate?, are substantially the same, but some of the explanations have been expanded. The method for agreeing a property valuation will now be the same as proposed for the voluntary purchase scheme, and are described in the section of the consultation document that relates to that scheme (Section 5.1). None of this renders the comments that I made in my blog Same as before? as no longer appropriate.

In the second halves of my blogs Let them eat cake and Same as before? I suggested a combined total of eleven comments that respondents might make:

  • That, in view of the low number of successful applicants achieved by the EHS, the qualifying criteria for the LTHS should be relaxed compared to the EHS, rather than made stricter.
  • That business owners should not be excluded.
  • That evidence of loss in market value should replace any application of proximity criteria.
  • That, even after being reduced to six months, the time on the market requirement is still twice that required for the EHS.
  • That it is unfair to expect a property owner to stand a 15% loss on a fair market price.
  • That it is not clear how the property owner is expected to demonstrate that HS2 is the reason for the inability to sell.
  • That the “no prior knowledge” requirement may damage the prospects for selling, since the benefits of the long term hardship scheme will not be available to the buyer.
  • That a “hardship” qualification excludes most sellers suffering a financial loss due to HS2 blight. The purpose of any compensation scheme should be to protect people from the financial losses cause by planning blight, not to find ways of preventing them being compensated.
  • That the reason given in paragraph 4.3.35 for holding panel meetings in camera is not sufficient justification for excluding the applicant, which is in conflict with the principles of open justice.
  • That, in the interests of natural justice, the long term hardship scheme proposals must include an independent appeals procedure. The ability to reapply is not an adequate substitute for an independent review process.
  • That it is essential that any additional evidence is disclosed to the applicant prior to the panel hearing, in sufficient time to allow the applicant to obtain his own additional evidence, should he wish.

Some further points were made in responses received to the original consultation, and an analysis of these can be found in Chapter 8 of the Dialogue by Design report. Additional points raised by respondents to that consultation include:

  • That the requirement for a property to be “substantially adversely affected” should be removed, since it is too narrow a restriction and is open to interpretation.
  • That any “upfront” fees demanded by estate agents to market a blighted property should be refunded to successful applicants within the compensation package.
  • That the “prior knowledge” criterion should take account of property deals after March 2010 where it can be demonstrated that there was no prior knowledge.
  • That hardship is a matter of personal circumstances, whereas compensation should be based on the loss in property value, or the degree of blight suffered.
  • That a fast-track process is required for urgent cases, such as terminal illness.
  • That the proposed six-month time limit on purchase offers is too short.
  • That the panel should carry out site visits as a part of the adjudication process in order that panel members may be better informed of local circumstances.
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3 responses to this post.

  1. The HS2 solution reflects a narrow “train line mentality”. Instead we should be thinking laterally to solve our network capacity problems.
    How about radically improving train braking systems so that more trains can travel safely on our existing lines? This relatively cheap and potentially world beating solution is discussed at http://www.cheshire-innovation.com/Transport%20internet.htm

    Reply

  2. Posted by David J Flower on November 22, 2013 at 1:43 pm

    I am surprised that there has been no comment on the assertion that selling prices are, on average, 88% of asking prices. Look at the following reference: http://www.hometrack.co.uk/our-insight/interactive-analysis/percentage-asking-price-achieved-over-time-by-region which suggests a figure of 93% to 94%. In fact, the figure is probably higher, as the percentage is higher when the housing market is active

    Reply

    • Thank you for your comment David and welcome to the site. Your point is well made. Whilst I did mention the 15% in my blog I did not comment on the Hometrack graph that demonstrates that the 12% quoted in paragraph 4.3.18 of the Consultation Document is probably almost twice the actual average gap between offer and selling price. This issue is covered however in the briefing note that HS2 Action Alliance has produced for the consultation (at https://www.hs2actionalliance.org/wp-content/uploads/2013/10/Briefing-Document.pdf) and so I have no excuse for overlooking it.
      I have, however, made sure that it has been included in the response to the consultation that the Cubbington Action Group will be making.

      Reply

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