CLA's HS2 Manifesto

24 February 2014

The CLA has actively campaigned for reform of the compulsory purchase regime for around 15 years. We have drawn up a manifesto for the proposed high-speed rail link summarising how the CLA is fighting on behalf of its members for compulsory purchase reform to deliver better co-ordination and fairer compensation, against the impacts of the scheme.

The issues and recommendations are below:

BLIGHT

  • Whether statutory or generalised, all properties within close proximity to HS2 will be blighted – how the market values and sales prospects are affected – to some extent. In most cases people will want to stay in their properties for as long as they can, but when they need to move they should not be disadvantaged by HS2.
  • Currently, protection of property value through a Blight Notice is only an option for certain property interests. 

Recommendations:

  • The CLA Property Bond Scheme should be introduced to underpin the market value of residential property reassuring current owners or future purchasers that they will not lose out as a result of HS2. The scheme also guarantees compensation to businesses and agricultural property owners should they wish to relocate or re-invest.
  • Abolition of Rateable Value limits to blight notices would help many rural businesses currently being prevented from submitting blight notices.
  • Enforcement is needed to ensure purchases proceed swiftly after a blight notice is accepted.

DUTY OF CARE

  • HS2 Ltd and its contractors should have a duty of care to the landowner and businesses affected by the scheme.
  • HS2 Ltd should be responsible for the actions of its contractors.

Recommendations:

  • Mitigation of the impact of the scheme on property owners should fall to HS2 Ltd. Owners should not have to rely only on financial compensation but also on mitigation measures..
  • An “Independent Person” or ombudsman should be put in position now to ensure that there is an easy, quick and independent resolution of problems as they occur and to enforce a duty of care.

LIMIT THE SCOPE OF THE HYBRID BILL

  • Development and regeneration clauses included in the HS2 Hybrid Bill should be removed, limiting the opportunity for profiteering by HS2 Ltd as the purpose of the legislation is to construct a railway, not facilitate other development in the rural area.

 Recommendations:

  •  A duty to minimise land take should be placed on HS2 Ltd to prevent unnecessary and non-essential purchase of land.
  • Temporary land take should be the default position for most of the land currently required, either under a licence or a lease with future reinstatement dealt with at the outset.
  • Permanent land take should be a last resort and only for land required for the railway itself. 
  • HS2 Ltd’s rights of access to Phase Two land should be removed from the legislation. This Bill deals with HS2 Phase One. Adequate voluntary access was given on Phase One so no additional rights can be justified for Phase Two.

COMPENSATION

Any compulsory purchase inflicts huge changes on businesses as well as enormous personal impacts. The compulsory purchase code is too reliant on financial compensation to be an adequate remedy.

Recommendations:

  • A Duty of Fairness should be in place, requiring the acquirer to demonstrate that the final compensation is fair.
  • The removal the concept of a “willing” seller and introduce the concept of “market value”. 
  • Disregard betterment in the same way as any betterment gained by HS2 Ltd will not be given in increased compensation to the landowner.
  • Remove Loss Payment ceilings and increase loss payments to 30 percent of the claim to properly reflect all the losses suffered, tangible or otherwise, by property owners as a direct result of the scheme.
  • Enforce the payment of compensation in advance. This payment should be a realistic reflection of the likely final amount of compensation, not an imposition of the

acquiring authority’s minimum assessment. 

  • Improve compensation for properties adjacent to the scheme, which are held back by only being able to make “Part 1 claims” but should be entitled to a full claim for their loss. Owners should not have to wait until a year after the scheme opens, but should instead benefit from advance payment of compensation under the current compensation code, or from the CLA Property Bond Scheme proposal.
  • Negative Equity needs to be addressed to ensure that these property owners are not  pushed further into debt as a result of HS2.
  • Ongoing Compensation should be provided for in the Bill to ensure that as significant new unforeseen losses become evident; compensation could be paid immediately, reducing the burden on businesses.
  • There should be a statutory right to redress drainage issues even after the rest of the compensation is agreed because these do not become evident for several years.
  • The use of minerals and the right to deposit surplus stone and soil within the scheme needs to be properly paid for by the acquirer.

VOLUNTARY SCHEMES

  • The Department for Transport has proposed various voluntary compensation schemes which only address some of the issues, and are too limited in their extent.

Recommendations

  • Any voluntary schemes introduced should apply to all property types whether farms, commercial premises or homes, whether owner occupied or tenanted.
  • The Exceptional Hardship Scheme needs to be revised as the ‘exceptional hardship test’ is too difficult to satisfy and has already left many suffering at the hands of HS2 for many years already. 

REPLACEMENT BUILDINGS

There are instances, where buildings are taken as part of the scheme, or their future use is not possible because of their location. In such instances compensation based on market value will be inadequate.

Recommendations

  • Funding replacement buildings should be offeredwhere buildings are lost to the scheme, rather than just offering compensation at market value
  • Planning consent for replacement buildings. There should be an onus on HS2 Ltd. to work with local authorities to deliver the replacement, and the local authorities should be under an obligation to facilitate the planning process to allow the replacement.

ADDITIONAL FINANCIAL ISSUES

  • Capital Gains Tax should not be charged on the proceeds from Compulsory Purchase to allow the reinvestment of any proceeds when the market and business conditions allow rather than on a timescale set by the HMRC
  • Business Rates and Council Tax should not be charged on properties left vacant as a result of HS2. In both cases a landlord who is unable to find a tenant would have to fund these after a short period of time.
  • Stamp Duty Land Tax should not be charged on the purchase of replacement property.
  • The Statutory Rate of Interest levied on acquiring authorities for late payment of compensation is a prescribed rate of half of one percent below Bank of England base rate – so currently zero percent. This rate needs to be revised to at least the cost of borrowing to that business, if not a higher punitive rate.