HS2 and Royal Assent - what does this mean?

What does Royal Assent mean?  

Royal Assent is the confirmation by the Queen that the Bill which has been debated in both Houses of Parliament becomes an Act of Parliament and therefore Law. For the HS2 bill all the provisions for Compulsory Purchase become implementable. 

What bits of the HS2 project does it cover? 

The current bill covers Phase 1 of the HS2 project to from London to Birmingham and the West Midlands near Lichfield.

Is HS2 definitely going ahead now? 

Following Royal Assent it is almost certain that the HS2 project will go ahead.

What should I do now and what compensation am I entitled to?

That depends on how much of your property will be needed for HS2 or how close your property is to the line.

All or some of my land/property will be needed to build the railway. 

Under the provisions of the Act, HS2 will be entitled to serve a notice to acquire the land. Following the Notice compensation negotiations begin. It is possible that not all of the compensation will be agreed before HS2 wishes to take entry. In which case a payment of “90%” should be requested. The figure is 90% of HS2’s estimate of compensation and may not reflect the total claim.

The headings under which compensation can be claimed is:

• Value of the land taken for the scheme – The value is the market value, ignoring its use for the railway scheme, but includes any development value or hope value which would be attributable to the land if there was no scheme.

• The diminution in value of the owner’s remaining land by virtue of the scheme and/or because of severance. This claim is collectively known as Injurious Affection. These claims can cover many factors for example loss of residential value, diminution of the value of a business and the severance of farmland making it less valuable.

• Costs and expenses incurred as a result of the acquisition. These claims are known as disturbance claims and are those which do not relate to the value of the land. The claims can range from the extinguishment of a business to the cost of re-directing the post to a new house.  Disturbance claims can be complex and often take considerable negotiation.

• Fees - professional fees incurred in advising a claimant are reclaimable as part of the overall claim.

• Statutory Payments – If a claimant loses their home they are entitled to a Home Loss Payment which is 10% of the value of the house to a maximum of £58,000. Owners of other property are entitled to claim the Basic Loss Payment which is 7.5% of the value to a maximum of £75,000. Occupiers are entitled to the Occupiers Loss Payment being 2.5% of the value to a maximum of £25,000 

There are opportunities and pitfalls relating to the compensation claim, so professional advice is essential. One major pitfall is the counter claim for Betterment which is where the value of the retained land is increased as a consequence of the scheme.

Compensation is payable to affected parties under what is known as the “Compulsory Purchase Code”. Unfortunately the “Code” is not written in one document and is short hand for a complex combination of statute law from Victorian times to the Millennium, along with extensive case law not only from the British Isles but also from the former Empire. There a cases from India and Hong Kong which form part of the code!

Successfully navigating a claim through the code requires expertise and experience. For further advice as to a claim do speak to the Knight Frank Team.

None of my property will be needed for the railway itself, but it will be directly affected by construction and operation.

If you live in the “Rural Support Zone” (generally 60 to 120 metres from the route) you may qualify for either the “Voluntary Purchase Scheme” or the “Cash Offer”. The Cash Offer is a lump sum representing 100% of the unblighted open market value of your property (from a minimum of £30,000 to a maximum of £100,000).

If your property is within 300m of the centre of HS2 You may qualify for payments under the Homeowner Payment Scheme.

The payments are due after Royal Assent and are:

You can claim £7,500 to £22,500 depending on which homeowner payment band you’re in:

Throughout the construction of HS2 the Express Purchase (Blight), the Need to Sell and the Rent Back Schemes are available.

Otherwise compensation for the reduction in value of the property through physical factors is not claimable until 12 months after the railway is in operation (ie if it is completed in 2026, compensation will not be claimable till 2027). 

My land or property will not be directly affected by HS2, but I think it will affect its value and saleability

Need to Sell Scheme

If you have been unable to sell your property following a reasonable marketing period, you may be eligible to apply for the Need  to Sell Scheme. You need to negotiate two main hurdles, firstly you need to demonstrate that the property has been properly marketed and that the reason it is not selling in the market is as a direct consequence of HS2 being close by.

The second hurdle is that you must have a ‘compelling reason’ to sell.  Compelling reasons include unemployment, relocation for a new job or ill health - but each application is judged on its merits.

Homeowner Payment Scheme

• You may be eligible for a payment if you live in the Homeowner Payment zone.
• The scheme will start when the powers to construct the railway are authorised by Parliament.

Who can apply?

• Your house or 25% of the total area of your property must be in the homeowner payment zone.

You must be the owner occupier of a residential, agricultural or commercial property.

An owner occupier must:

• Be the freeholder or a leaseholder with at least three years left on the lease

• Be living in or running a business from the property or have done so for at least six months in the last 18 months if the property’s currently empty

• Have bought the property before 9 April 2014 for Phase 1 and before 30 November 2015 for Phase 2a when the proposals for the homeowner payment were announced

Commercial property won’t qualify for homeowner payments if it has a rateable value of £34,800 or more.

What you’ll get

You can claim £7,500 to £22,500 depending on which homeowner payment band you’re in:

• You’ll be eligible for the band in which your residential dwelling sits if your land is covered by more than one homeowner payment band.
• You may be eligible for the £7,500 band if your dwelling is outside the bands but your land is within them.
• You’ll be eligible for the higher payment if the dwelling itself is in more than one band.
• Most people who receive money under the homeowner payment scheme would not have to pay tax on it.

You can accept payment and still be eligible for the Need to Sell Scheme - the value of the payment (plus statutory interest) will be deducted from the purchase price.

My land or property is in phase 2 of HS2

• The route of Phase 2b was announced and Safeguarded in November 2016.  Phase 2a (Lichfield to Cheshire) was Safeguarded in January 2016
• The effect of Safeguarding is that the compensation schemes are now open for directly affected property owners.
• Phase 2 needs to go through an Environmental Statement before it goes to Parliament for a Phase 2 Bill.  

For advice about Phase 2 please contact Knight Frank's HS2 Team if you think your property or land might be affected.