In October last year, the Secretary of State for Transport launched the government’s consultation on compensation proposals for properties affected by the High Speed 2 (HS2) rail link. The consultation closed at the end of January, promising to offer “compensation that goes above and beyond the statutory minimum” due to the exceptional nature of the project.
This sounded like extremely good news for property owners. However, the government’s focus is on householders and small owner-occupied business premises. There is little in the detail which will offer much comfort to commercial landlords or tenants who may have to look to the parliamentary process required to authorise the project if they want to realise compensation in excess of the statutory minimum.
If you are an owner-occupier of business premises with a rateable value above £34,800 or the landlord or tenant of commercially let premises, you will not benefit from the enhanced provisions which are intended to benefit ‘eligible owners’, defined by reference to the Town and Country Planning Act 1990, to include:
- Residential owner-occupiers
- Owner-occupiers of small business premises (those with a rateable value up to £34,800); and
- Owner-occupiers of agricultural units
Compensation: commercial landlords and tenants, what can you expect?
If you are an owner-occupier of business premises with a rateable value above £34,800 or the landlord or tenant of commercially let premises, you will not benefit from the enhanced provisions detailed above and can only hope to achieve the minimum provided for by statute in terms of compensation for compulsory purchase. This means that HS2 needs only to ensure that you are in no better or worse position than before the compulsory purchase. Your claim can cover:
- Unblighted market value of the property;
- Disturbance costs;
- Basic loss and occupier’s loss payment;
- Loss of profits and reasonable relocation costs
- Total extinguishment of the business.
As if this were not disappointing enough news, you will have to wait until HS2 has compulsory purchase powers. That will happen only when the parliamentary Bill has received Royal Assent which HS2 currently anticipates will be in 2018. This means a minimum of five years’ uncertainty.
Will it happen?
HS2 has yet to be authorised by way of parliamentary bill. The procedure allows anyone affected to submit a petition which gives scope to those who will be detrimentally affected to request enhanced protection, through assurances and undertakings above and beyond those in statute. Time will be of the essence and early action once the procedure is underway is recommended.
What can you do in the meantime?
There is still a level of uncertainty surrounding the progress of HS2, but the proposed routes for both Phases 1 and 2 are available. It would be prudent to see if your properties are affected.