1 Presentation Property Compensation Hilary Wharf, Director HS2AA 7 November, 2013

2 Summary: our agenda for change 1.New policy: We must modernise compensation arrangements for national infrastructure projects. Compensation must reflect the real extent & severity of blight, not 60/120m limits that are not grounded in evidence; & not ignore the timescales involved 2.Property Bond approach (to support market, private sales, give assurance): To replace the Hardship Scheme (not Voluntary Purchase Scheme (VPS). To apply to properties beyond any VPS area /Safeguarded area. A possible balance between a distance-based limit and a minimum threshold loss. 3.A long-term scheme: should not contain hardship rules - these are about a person’s circumstances and are unrelated to the blight. 4.The loss suffered: Government should put the full value in the HS2 business case. 5.Mistaken statements: DfT to correct mistaken Deloitte statements on Property Bonds – (HS2AA’s & Central Railway) and on extent of blight (and provide the evidence). ….half a million properties are within 1km of HS2, need Government to be fair

3 What’s at issue?  How much blight is there?:  EHS cases: extent: out to 1.1km (even HS1 was 600m);  average: 200m - 300m ( HS2 Ltd provided )  severity: known, but not released.  CBRE report: extent: study used postcodes of average 2.29km size (but too wide)  severity: consistent with av. 19.5% loss within 1km (27.7%rural /11.3%urban)  Estate agents: extent: out to 500m; 1km; miles. Greater in rural areas  severity: 20%, 30% and even 40%; unsaleable by line/in affected villages Properties potentially affected: ……….blight may be temporary, but HS2 takes 13yrs /20yrs Within 60m (rural) Within 120m (rural) Within 300m (rural) Within 500m (rural, +150m urban or 150m from tunnel Within 1km (or 250m of tunnel) Within 1km Phase 1823 (1,101 incl. urban) 1,6002,50043,000172k236k (486k incl. phase 2)

4 What’s on offer? …………. amounts to under 2% of properties blighted being compensated

5 What’s wrong with hardship basis?  Availability of compensation: not proportionate to the loss incurred, but relates to a persons capability to withstand the loss (effectively means tested)  Only helps a minority: the majority who lose ££ are excluded /a.  Unjust: individuals should not bear the loss (‘polluter pays’) for project said to be in national interest. “Fairness “ criteria should not just be the worst affected  Inappropriate for HS2 timescales: for 15/20yrs  Traps people: loss of freedom to move, re-mortgage.  Exacerbates blight: no prior knowledge clause guarantees a new purchaser doesn’t qualify – and will only pay a blighted value.  Paralyses the market for 15/20yrs: need the surety of compensation if the market is to have confidence restored.

6 So why is a property bond better?  Property Bond: a “win-win” solution:  Fairly compensates all those blighted (and not just right next to line)  Should replace Hardship scheme not Voluntary Purchase Scheme  Restores market confidence and reduces blight itself (by providing reassurance to owners, prospective purchasers and mortgage lenders of protection against losses) “Insurance policy” approach  Can avoid opposition to HS2 driven by fear of a large uncompensated losses (by saving the indirect cost of objections and resultant concessions)  Self-financing: if HS2 has little impact when built as Government say, then Government gets its money back (renting out in the interval)  Can cost nothing if HS2 is cancelled – like Central Railway

7 Could a balance be struck?  Government fear unlimited liability but temporary loss if prices bounce back – so it’s really a cash flow issue  Fairness requires compensating all material losses, which are not neatly clustered within so many metres of line.  The property bond might involve a mixture of:  a base distance limit eg 500m, and for beyond this limit  being able to demonstrate a minimum threshold loss.…it’s surely time to take a step forward in modernising arrangements?

8 The consultation materials  Deloitte report: by own admission had little time to investigate/check details. Devised proposals without ref. to evidence of blight from EHS, CBRE, other sources. Misinterpreted core Central Railway and HS2AA evidence that influenced findings.  DfT knowledge: had HS2AA and Central Railway evidence, letters; meetings with Central Railway too; consultation responses; had blight evidence.  Claim: Central Railway scheme  Not targeted on property blight: incorrect (main purpose, 1997 Gov report recognised)  For line-side/adjacent homes needed for construction : incorrect (much further)  No evidence of effect of bonds on property market: incorrect (35% sold /re-mortgaging)  Claim: HS2AA scheme  High up- front cost from getting valuations: incorrect (scheme says do when sell, like EHS)  No one has had a scheme with no distance limit as HS2AA’s: incorrect (C Railway)  HS2AA included statutory add-on sums: Incorrect

9 Summary: our agenda for change 1.New policy: We must modernise compensation arrangements for national infrastructure projects. Compensation must reflect the real extent & severity of blight, not 60/120m limits that are not grounded in evidence; & not ignore the timescales involved 2.Property Bond approach (to support market, private sales, give assurance): To replace the Hardship Scheme (not Voluntary Purchase Scheme, VPS). To apply to properties beyond any VPS area /Safeguarded area. A possible balance between a distance-based limit and a minimum threshold loss. 3.A long-term scheme: should not contain hardship rules - these are about a person’s circumstances and are unrelated to the blight. 4.The loss suffered: Government should put the full value in the HS2 business case. 5.Mistaken statements: DfT to correct mistaken Deloitte statements on Property Bonds – (HS2AA’s & Central Railway) and on extent of blight (and provide the evidence). ….half a million properties are within 1km of HS2, need Government to be fair

10 Other points Other detail on the consultation proposals……..

11 DfT’s five criteria DfT say the decisions will provide in “Government’s reasonable opinion” the “best balance” between the five criteria: 1.Fairness – now redefined to “most directly & specifically affected” 2.Value for money – for the taxpayer 3.Community cohesion 4.Feasibility, efficiency and comprehensibility – or simplicity 5.Functioning of housing market Nothing about the ‘polluter pays’ Nothing about fairness to all those suffering blight Nothing about the weightings of the 5 criteria given to Deloitte …… the decision depends on weightings that are not given

12 Express purchase ProposalIssue/comment For those in Safeguarded Area (60m from centre line on surface). Excludes those over tunnels. Owners (homes, small bus., & Agric units) can require HS2 Ltd to buy their property before its needed (serving a blight notice). For compulsory purchase: your legal rights! For others: stay or ask to be bought early. No purchase scheme over deep tunnels. Waved the need to prove efforts to sell.Recognises the impossibility of a sale. Unblighted price; + 10% ‘home-loss’ payment (capped at £47k); + moving costs. Nothing extra on top of your legal rights. 10% and cap inappropriate. CLA say 30%. Property partly inside Safeguarded Area qualifies unless small part of large property. Lack of clarity. Rural homes have a-typically large gardens. ‘Sale and rent back’ option for homeowners (for 300+ homes demolished). Also now an option for all HS2 ltd purchased properties. Many will be hard to rent out, so win win. Need to help those failing VfM test but who want to stay.

13 Long-term hardship scheme ProposalIssue/comment For outside Safeguarded area & any scheme in rural area. The main scheme for the thousands who are blighted. Unreasonable rules given long timescales for HS2 (15yrs+) 1 person under Crossrail equivalent scheme qualified in 8 yrs Unblighted price.No additions. Eligibility: strong personal reasons for selling, but can’t do so other than at ‘significant loss’ Property: only owner-occupiersExcludes all 2 nd homes, rented properties (even sole home) Location: ‘substantially adversely affected’. An unnecessary criteria. Should just be if blighted. Eligibility should instead be set by ‘market loss in value’. Effort to sell: 6m. on market; no offer <15%; HS2 is cause. Worse than EHS (3months): unreasonable to be double. 15% threshold should be lower – it’s an unreasonable loss. No prior knowledge of HS2.New buyer can’t qualify (buys at lower price, bakes in blight) Hardship rules: as EHS, but now includes future hardship. Retaining hardship rules means most people get nothing. Linking downsizing to financial hardship – is means testing the elderly. …….the property bond should have been the alternative

14 Voluntary purchase scheme (VPS) option for Rural Zone ProposalIssue/comment Rural Zone : north of Bucks/Hillingdon boundary to joining WCML; not over tunnels Unfair to exclude urban blight or over bored tunnels. Better Zone than last consultation, but still crude limit. VPS is 120m from centre line (NB same as HS1 used) Arbitrary cut-off – ignores topography, HS2 construction VPS should be based on ‘market loss in value’. Distance is too limited – no blight evidence provided to show all ‘significant’ loss is inside the area, and it isn’t. HS2 more environmentally damaging than HS1. Owner-occupiers (homes, small bus. & Agric units) 788 covered Wrong to exclude second homes, rented out homes, and even when sole property a person owns. Unblighted price (average of 2 valuations (3 if >10% apart). No other costs (as DfT say owner chooses to move). Worse than HS1 that paid other costs. Property partly inside qualifies unless small part. No clarity; rural homes have a-typically large gardens ……….so what’s the other option being offered?

15 The property bond option for Rural Zone ProposalIssue/comment For Rural Zone onlyUnfair to restrict. Should be where losses actually occur – which can be in urban & over tunnels too. Distance based boundary limit; not top-up compensation. Deloitte say a 120m distance; DfT say undecided at present. Arbitrary cut-off – ignores topography, HS2 construction. Should be based on a material ‘market loss in value’. No blight evidence provided. Yet EHS distances paid out to 1.1km; CBRE blight report (consistent with average 20% loss at 1km, and more in rural areas). Property valuation done at outset when Bond is issued. Represents up-front scheme cost & admin burden. HS2AA proposed this step only when a sale is activated (like EHS); seller could pay & re-imburse if qualify. Bond passes to private owner OR if can’t sell privately, HS2 Ltd purchase when trigger passed. Allows purchaser and mortgage company to have a tangible guarantee and so supports property market. Much emphasis on untried, untested, uncertain, unused The facts are not correctly presented ……the option is narrower than back in 2011 (property bond v hardship)

16 The practicalities How, what and when……..

17 Consultation questions The 7 questions ask for your views on the: 1The Criteria put forward to assess options for long-term discretionary compensation? 2The proposals for an express purchase scheme? 3The proposed long-term hardship scheme? 4The sale and rent back scheme? 5The alternative proposals for renting properties to their previous owners? 6The proposals for a Voluntary Purchase Scheme in a “Rural Support Zone”? 7The option to introduce a time-based Property bond scheme within a Rural Support Zone as an alternative to the Voluntary Purchase Scheme? There are Maps, Consultation Document, a Deloitte report on HS2 Ltd website: HS2AA have published some guidance to consider ……remember the 4 December 2013 deadline

18 How to Reply It must be done by 4 December 2013 Use a response form and send it to Freepost address on the form. Or it direct to Go online at Answer any or all of 7 questions and send by or post to "FREEPOST RTET-YGJB-GUAH, PROPERTY COMPENSATION CONSULTATION 2013, PO Box 70178, LONDON, WC1A 9HS TIPS 1.Have one family member do a full response, others do a postcard. 2.Don’t just answer the questions– demand fair compensation, and reject HS2! 3.Mention your village/chilterns/AoNB – it gets in the summaries of responses 4.Suggested points to make are on HS2AA website too Remember the 4 December 2013 deadline