What the cancellation of HS2 Phase 2 means for former landowners

It has been over one month since the Prime Minister announced the cancellation of the Northern leg of the HS2 (high speed) railway line. Over a decade of construction, discussions and planning has gone into facilitating HS2 with almost £423 million being paid out purchasing properties on the western leg from Birmingham to Manchester. Prior to the announcement, agreements were still being finalised and negotiated leaving HS2 Limited with multiple properties they no longer require, and disgruntled landowners confused as to what the announcement means for them. 

What does this mean for you?

Compulsory purchase is a mechanism which allows certain bodies to acquire land without the consent of the owner. And there is a general right to compensation if your land is acquired by compulsory powers. 

In respect of Phase 2, HS2 Limited has confirmed that in most cases the issuing of new compulsory purchase notices has ceased while they await further instructions from the Department for Transport. Whereas other properties that were at advanced stages of the compulsory purchase process will continue until completion. Those landowners can be reassured their sales will not fall through where they have made arrangements for replacement accommodation. 

Land within the vicinity of the Phase 2 route may have been subject to ‘safeguarding’ resulting in restricted development in such areas, as local authorities must consult with the government on receipt of planning applications. Given the announcement, we can expect to see an increase in new development options arising in these areas.

The Crichel Down rules

These are non-statutory rules which arose in the 1950s in relation to a property known as “Crichel Down”, originally acquired for use during WWII. The basic premise is that where land was subject to an acquisition by (or under the threat of) compulsory purchase, and subsequently becomes surplus to requirements, it must in certain circumstances be offered back to the former owner, their successor or a sitting tenant. The offer will be to buy back the property at its then current market value, which is to be determined by HS2’s professionally qualified valuer.

HS2 have also produced a paper, “Policy Paper C6: Disposal Of Surplus Land” which sets out their approach to disposal of surplus land, and complements the Crichel Down rules. 

Whilst appearing straightforward on the face it, the rules are in fact quite narrowly confined, and there are several exclusions. For example, if the land has materially changed in character since acquisition, the rules will not apply. This could include substantial works done to a building existing on the land at acquisition, or the erection of permanent buildings on bare land. This is likely to be a substantial problem in the case of land acquired for HS2 (but no longer required by HS2) given the nature of the project. 

The procedure under the rules (where they apply) is as follows:

• Letter sent from HS2 inviting former owner to buy the property at the valuation made by HS2’s valuer.
• Former owner has 2 months from the date of the letter to indicate an intention to purchase. (If no response has been received by this stage, the property can be sold on the open market).
• Further period of 2 months if the former owner wishes to purchase the land, to agree terms (other than value).
• 6 weeks to negotiate price once terms are agreed.
• If any terms (including price) can’t be agreed within these periods (or reasonably extended periods), the land will be sold on the open market (with no guarantee that the former owner will succeed in trying to buy it back).

Where the former owner’s address is not known, HS2 will have to advertise the proposed sale in accordance with the rules, which includes, among other publications, in the London Gazette.

What to do/expect if your land was subject to an acquisition by (or under the threat of) compulsory purchase

Former landowners do not have the right to request a sale back. It can only occur where the Secretary of State decides the land is no longer required, surplus, and does not fall within any of the exceptions to the rules (although HS2 may engage in response to a request from a former landowner). 

If HS2 have sent you a written invitation to purchase back your property, and you wish to accept, then we would recommend seeking independent legal advice to take you through the procedure detailed above.

If you know (or are unsure whether) your current address is unknown to HS2, check the places where HS2 will be required to advertise an invitation to purchase back, including the newspapers local to the property, in case they are attempting to contact you (or make contact with HS2 yourself). 

Where it is decided that an exception to the rules applies, HS2 will notify the former landowner that the property has become surplus to requirements, but is not required to offer it back to them. If you disagree that the rules should be disapplied and wish to challenge the decision, we would recommend seeking independent legal advice. 

There are various uncertainties in this area. For example, some land will have been acquired where the main HS2 works are not yet underway, but the preliminary works will have been undertaken to varying extents. It will be interesting to see how HS2 approach the “material change” exception to the rules in these cases. 

Due to the various movements in market trends, it is important to note that the price at which land is offered back to former landowners is unlikely to equate to the compensation initially paid out. Any sums previously paid to former landowners to cover disturbance and/or loss will not be included in the repurchase price. It therefore comes as no surprise that the government is expected to recover only half of the initial investment.

The cancellation of the project has sparked requests to review the compulsory purchase regime. We will wait and see what the future has in store on that front.