HS2: Need to Sell Two – a worthwhile variation to the original scheme?

Introduction

The Department for Transport has commissioned a qualitative research exercise to gain insight into the views of residents local to the HS2 rail network on a potential new non-statutory property scheme, Need to Sell Two (“NTS2”).

The scheme would vary (but not abolish) the existing Need to Sell scheme (“NTS”), which allows property owners to apply to sell their property to the Government for its full, unblighted value, where they have been otherwise unable to sell their home due to its proximity to the HS2 line.

NTS makes up a small part of the compensation framework for property owners affected by HS2. Unlike other schemes and statutory provisions however, NTS does not require the property to be located within a certain distance from the railway line.

The variation to the scheme would allow for property owners to sell their home on the open market, with the Government paying the difference between the sale price and the unblighted price, plus an additional incentive payment.

The Report

The researchers interviewed both a group of individuals who had applied for the NTS scheme previously, and a group who had not, but who could potentially apply for NTS2 in the future. The views of the interviewees were mixed. The most notable points of discussion are as follows:

Qualifying criteria – Under the NTS scheme, the property owner must be able to evidence a “compelling reason” to sell their property. The NTS2 scheme would not alter the qualifying criteria. The participants mostly felt that having the value of their property impacted by HS2 was a sufficient reason to qualify for the scheme, but the narrowness of the criteria would render some applicants ineligible. One participant’s comment that to meet the criteria “you have to live 2 centimetres away from the train line” is indicative of the general frustration with the current scheme. Further, the applicant is (and will continue to be) required to produce what has been reported by some participants to be an onerous amount of evidence, proving their eligibility.

Value of property – Whilst the proposed scheme would in theory enable the applicant to receive an open market value for the sale of their property, there is some feeling amongst the participants that they will not in practice receive a truly “unblighted” value. One of the issues with the current scheme was articulated by some to be unfair due to the valuers offered being confined to those on a panel selected by the Government.

Incentive payment – This is proposed by the NTS2 scheme. Discussions with the participants involved how the scheme could make the payment fair. Would it be a set amount or a proportion of the property value? Some queried whether it would it actually entice anyone to apply, whilst others who expressed a mild preference for NTS2 over NTS, based their view on the incentive payment. Those who were not particularly impressed by the incentive were of the view that it would add another layer of bureaucracy to the whole process, and would make the scheme complicated and protracted to a greater extent than the NTS scheme already is.

Conclusion of the Report

There was no clear pattern of preference towards either scheme. The Department for Transport has confirmed that it has not proposed any changes to the NTS scheme as a result of the report.

Commentary

In order for the proposed scheme to be more than just a “back-up” option for property owners, the general consensus is that it requires simplicity, transparency and efficiency.

To the extent that any further variations to NTS do not address the underlying issues with the current scheme ((1) difficulty sourcing relevant documentation (2) communication with NTS team (3) how valuations are agreed), it seems unlikely that it will be well received by previous NTS applicants or potential future applicants.

If the Government wishes to escalate its efforts to encourage property owners to apply for NTS or other similar schemes, it will have to have to find a way of making them genuinely accessible for applicants. The report indicates that the incentive payment would not sufficiently achieve its purpose, and participants were largely of the view that there would be too many hoops to jump through to make the incentive payment worthwhile.

Although the DfT will not amend the NTS following the report, it may still propose further modifications of the scheme. Property owners living near the HS2 railway line would be advised to keep up to date with the compensation framework, to understand their options, should they wish to explore selling their property.