Businesses urged to plan ahead as HS2 gathers speed

1 February 2012

Businesses and landowners are being urged to take stock following the Government’s recent announcement that HS2 will go ahead. Partner Iain Johnston, HS2 legal advisor and head of the planning and environmental team at Birmingham law firm SGH Martineau, describes the next stages in the process and offers guidance to those likely to be adversely affected by the £51 billion high speed rail initiative.

“The first thing to say is that although Ministers have approved the route, it is not set in stone. There were a whole host of amendments to the route made during the consultation process last year, including changes in and around Lichfield, Warwickshire, Northamptonshire; Buckinghamshire and Ruislip. Due to its hugely controversial nature, the London to Birmingham route is still susceptible to legal challenge by judicial review by one of the many third party action groups. One or more of them may seek to challenge the decision in court on financial or business grounds; environmental concerns or inadequate consultation issues. However such actions must be taken within three months of the decision and parties considering such actions must have a realistic case if they wish to challenge the decision at this stage.

“Assuming legal challenges do not hold up the process, the next step will be the Safeguarding Consultation in spring of this year. Following this consultation, the Secretary of State will issue a Safeguarding Direction to affected Local Authorities to protect the land needed to build and operate HS2 from other development proposals. Each Local Authority must then issue a formal resolution. Any planning applications in the system at that time will be referred by the LA to the Secretary of State.

“Such applications could increase the value of the land in question which is why anyone considering submitting an application should do it now as this potentially will increase the amount of compensation received. You are entitled to operate your business as planned so you can take measures to enhance the value of a site. You can realistically adopt measures that do this up until the Government triggers its compulsory purchase powers under the future Hybrid Bill. Businesses may also seek to acquire sites near certain transport hubs to take advantage of the future improved transport links.

“The government has been operating an Exceptional Hardship Scheme (EHS) for those landowners who are suffering undue hardship in blighted properties and who are unable to sell. The EHS is not straightforward and I urge people to take professional advice as the devil is in the detail. For example, claimants must be able to prove they have been marketing their property for at least three months with no offers within 15% of the market value.

“Many landowners on the route of the HS2 or near to it have suffered a blighting effect on their properties. I recently acted for a couple living in Kenilworth, Tim and Lynne Nixon who owned a property near the line in Red Lane, Burton Green. They were in the process of relocating abroad for employment purposes and desperately needed to sell their home. However many prospective purchasers refused to proceed when they realised the property was near to the HS2 line, and may be subject to noise impacts. Eventually we were successful on an application under the Exceptional Hardship Scheme which resulted in the Government purchasing the property.

“Estate agents are having to deal with this issue on a regular basis. John Boothroyd, an estate agent in the Kenilworth area, states that the blight effect in the area of HS2 has been substantial. In his view, some properties very near the line, but outside any potential CPO, will have great difficulty in selling. Prices are generally down by 20% in the area as a result of HS2.

“When the route is ‘safeguarded’ later this year EHS will close and thereafter the statutory blight procedures are triggered. This is, in reality, a speeded up form of compulsory purchase that some landowners can take advantage of if their land or commercial/agricultural property is going to be demolished or made unusable by HS2. Blight means that, subject to meeting the criteria, those land or business owners will be able to apply to the Secretary of State requiring purchase of the property in question. The Government has also announced that there may be an enhanced form of statutory Blight provision which will enable more people to apply – we’re waiting to see what form this will take.

“In 2013, the Government will progress a Hybrid Bill in Parliament to give itself the statutory powers to carry out the project. Although rare, Hybrid Bills have been used by Government in the past for previous construction projects of this size, including the Channel Tunnel Rail Link – although it took two years to become law. The recent Crossrail Bill is another example. The Hybrid Bill is likely to include powers to buy all necessary land and properties to build the line, with details of compulsory purchase orders and compensation; any changes needed to the existing general laws covering railways and how to protect historic buildings and utilities near the line. There will be further opportunities for parties to influence the detail of the project by submissions to the Select Committee appointed to scrutinize the Bill and so influence Parliament. Presuming this Hybrid Bill also takes two years, it is likely to be passed in 2015 with construction potentially commencing in 2016.

“As you can see from the various stages, there are still many steps to be taken before construction begins, with several opportunities for people to still have their say. However, there is only a certain amount of time for people to make plans and arrange their business and property dealings which will influence the amount of compensation they may receive. It is imperative that people start the ball rolling now.

“Despite all the negative comments about HS2 which have been much publicised, there is no doubt in my mind that the high speed rail link will create business opportunities, especially around the identified important transport hubs. There is also no doubt that many businesses and landowners will be adversely affected. Therefore taking various steps now to protect your interests and enhance your right to compensation is not a cynical approach but the right thing to do to counter-balance the hardship or blight that a project of this size and nature will undoubtedly cause. It’s an extremely important time for businesses, institutional investors and landowners in Birmingham, London and all the intervening towns and rural areas.”

Iain spoke to businesses and landowners at our HS2 seminar in Birmingham and London. Below is a video from the event.