Tricks of the Trade

by Jeremy on 17-Oct-2013

In September the Government announced its new compensation proposals for those affected by HS2 and described them as “generous and comprehensive”. But we cut our teeth on the previous proposals which were “the most generous ever” and are not taken in by this street trader language. The ‘lucky’ few who fall within the 120m boundary will indeed be taken care of but the vast majority of households affected will be left out in the cold. How are the Government managing to do this while appearing to be so generous and understanding?  Here are a few of the tricks of the trade.

  1. Sleight of hand The stated criteria for the new proposals are: fairness for those affected, value for money for the taxpayer, community cohesion, feasibility, efficiency and comprehensibility and the functioning of the housing market. But on the other hand, the Government “does not expect the scheme it eventually adopts to necessarily be highly regarded under all criteria”. No doubt “fairness for those affected” and “the functioning of the housing market” are the criteria that will slide out of sight, much to the Government’s regret.
  2. Double-think Consider these two sentences:
    Values can be expected to recover when the scheme is operational and its full effects are known. The Government considers that it is unreasonable to expect taxpayers to compensate for temporary reductions in property values that subsequently recover”.
    The Government considers HS2 to be an exceptional project for a number of reasons. The period of time needed for design and construction is very long. The linear nature and overall length of the development is also unusual, as is its largely rural setting.”
    OK if they accept that it is unusual, why are they basing their assumptions on past history? The “largely rural setting” will mean that values will not be inclined to recover. In an urban or suburban setting, there are many reasons for choosing to live in a particular area – good schools, great leisure facilities, a high street with excellent shops, and just the right tube or bus stop. So if a new infrastructure project comes along it may put prospective house buyers off for a while but in the end the area still has things going for it and prices do recover. Conversely, in the countryside we have to drive to most amenities anyway, so if a noisy railway goes right past one village, then we’ll choose to buy a house in another village a couple of miles further away which has access to all the same amenities but also has peace and quiet which country dwellers seek. There is no reason why anyone should ever want to buy a house in the country near to a noisy railway line, unless they can get it at a substantially reduced price.
  3. Not my problem, mate The “exceptional” hardship scheme has been transmuted into the “long term” hardship scheme.  It is not clear whether it is “long term” simply because the scheme is to cover a long period, or whether the “hardship”, while no longer needing to be “exceptional”, has to have the potential for ruining a good chunk of your stay on this earth. The big problem with the Long Term Hardship Scheme is the “Hardship” qualification.  Why should you have to suffer actual hardship in order to qualify for the compensation that enables you to move and get on with your life? What’s wrong with just wanting to move? They don’t even define hardship – but a rule of thumb judging on past experience is that if your story is heart-wrenching enough to get into the Daily Mail, you may stand a chance.
  4. Two Card Trick Another astonishing feature of this scheme is the15% clause. Under it, if you have had an offer on your house within 15% of the asking price and have rejected it, your application will fail. This is because, they say, there is “historical evidence” that 12% is the average drop that people are likely to accept when selling a house. It should be obvious to everyone, although apparently not the government, that this very high figure must be an average that includes over-optimistic asking prices. But here comes the punch line. A further  qualification for the LTHS is that your house has to be on the market at a “realistic asking price”. In other words, you start at a low price and take a further great big hit. There is no explanation, by the way, for the 3% they have added to this already high figure of 12%.
    To get an idea of the effect of this, a look at one village which will be adversely affected by HS2 shows that if people were to sell their houses at a price 15% below Zoopla’s current estimated price, then everyone who had bought their house since mid 2004 would get less than they paid for it. In over half the cases they would get less than 90% of what they paid for it. Compared with Nationwide’s calculator which indicates that house prices have risen by an average of 11.36% since 2004, this is disastrous. The government’s rules would ensure that these people would simply not be able to move. This is not “normal functioning of the property market”.
    Because of the shortcomings of the scheme, some householders may run out of options – their lives will be put on hold for over a decade, all their plans for the future dashed. The Government presumably washes its hands of this problem. 
  5. Smoke and Mirrors Consider this sentence: “As of 1 October 2013, 121 applications to the EHS had been accepted. Of these, purchases had been completed in 96 cases”. Nearly 80% success rate – sounds promising doesn’t it? Except that that word “accepted” is important here.  The number of applications received is not mentioned. It is actually much higher at 503, but most applications are rejected at the first stage.  The true success rate is no more than 24% with only 19% of those received resulting in purchases being completed.
  6. Sabotage One of the reasons this consultation had to be done again is that the DfT did not give proper consideration to HS2AA’s bond proposal. Forced now to give it attention, what have the DfT done? Sabotaged it completely by rejecting all but a geographically limited version of it, so that it ends up as a slightly worse alternative to their own proposal.  Sir Humphrey Appleby would be proud of them!
  7. Quick, let’s hide behind this law The 1973 Land Compensation Act is beginning to show its age – it refers throughout to highways and “aerodromes” and, incidentally, doesn’t seem to know that railways exist at all (perhaps in those days the government regarded railways as a thing of the past). You cannot make a claim until one year after the line comes into use, if you live that long (wait a minute though – death qualifies as long term hardship, so it’s not all bad news). A claim can be made for loss in value of a property because of physical factors (noise, vibration, smell, fumes, smoke and artificial lighting).  So if you paid a premium because your house had “stunning countryside views” and now it hasn’t – tough! Also, don’t think it is going to be easy proving there is any noise – HS2’s publicity film of the train showed it making less noise than the local bus and they have an Orwellian capacity for rewriting the truth and believing it. The fact that you probably have a bus three times a day, whereas the train is going to pass 36 times an hour is irrelevant to them. Incidentally, watch out for future skulduggery regarding the number of trains per hour because, under this law, you cannot make a later claim for “intensification of an existing use”.

HS2 Ltd are holding a compensation roadshow at Brackley Football Club, St James Park, Churshill Way, NN13 7EJ on Monday 21st October from 12 noon till 8 pm. Go along and ask some awkward questions and then be sure to make your views known by responding to the consultation by 4th December 2013. Details can be found here.

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