This is an edited extract of the Hs2 Euston Action Group Petition to the House of Lords select committee in Spetember 2016. The petition played a large part in pursuading the committee to recommend more compensation for the Euston Area and the Government is now putting these together.

The existing Government compensation package can be read by following this link,

Existing Govt. Compensation.

 

HEAG petition extract.

Session 5: Compensation

1. Introduction

1.1 The House of Commons Select Committee (“HCSC”) recognised that Camden is “exceptional and needs special treatment”. The government has not recognised this through either the mitigation or the compensation that is being offered.

1.2 In Euston, 2,986 people (1,238 households) live within 60 metres of the construction site; a further 3,186 (1,331) live within 120 metres; and 11,414 (4,642) within 300 metres. Thus 17,568 people (7,211 households) would be entitled to a home owner payment were they to live in a rural area.

1.3 The Promoter has recognised the need to introduce a number of measures to supplement the National Compensation Scheme in rural areas, but not Euston. Since the Bill was introduced in the Commons on 25 November 2013, the impact on homes or businesses in the Euston area has become progressively worse. The AP3 proposals, announced on 8 September 2015, not only extend the construction works from 2026 to 2033, but also increase the intensity of the impact of the works. The additional impact of the comprehensive redevelopment of Euston station has yet to be assessed.

1.4 In their interim report, the HCSC identified a primary aim of compensation as being to give “residents the confidence to stay, ensuring continuity and coherence within their communities”. We endorse this principle.

1.5 At Appendix 1, there is an Advice from Sir Keir Starmer QC MP on the impact of the ECHR. Recognising the developing European jurisprudence, the Promoter has proposed a number of special measures for rural areas. Our complaint is that these do not extend to Euston:

(i) The Express Purchase Scheme: A recent government publication states that “If you own and live in a property that is very close to the line of the route and is in the designated ‘surface safeguarding area’, you could apply for it to be purchased”. In rural areas, the line has been drawn to embrace all properties within 60 metres of the new line. In Euston, it has been drawn only to include those properties which are to be demolished, save for four properties at 117-125 Parkway. Residents who live within 10 metres of the construction works, whether in Cobourg St, Park Village East, Mornington Terrace, Regents Park Estate (including Cartmel), or in Ampthill Square, are excluded from the scheme.

(ii) The Rural Support Zone: “There are payment and purchase schemes for people who live up to 120 metres from the line of the route (where not covered by safeguarding)”. In rural areas, eligible homeowners within 120m of the centre of the line may require the government to acquire their homes at 100% of its unblighted value under the Voluntary Purchase Scheme. Alternatively, if they do not wish to sell, they can claim a lump-sum payment of the unblighted market value of their property (from a proposed minimum of £30,000 to a maximum of £100,000) under the “Alternative Cash Offer”. This scheme does not extend to urban areas.

(iii) The Home Owner Payment: “There will be cash payments for people who own and live in properties in the homeowner zone, which is typically up to 300 metres from the line of the route, next to the rural support zone”. Homeowners are entitled to a cash payment if they live between 120 and 300 metres from the line. The payments range from £7,500 to £22,500, depending on how close they live to the line.

(iv) The Need to Sell Scheme “A purchase scheme for people who have a compelling reason to sell their property, but can’t do so – other than at a significantly reduced price – because of HS2”. This is the only scheme that is available in urban areas. There are numerous flaws to this scheme.

1.6 HEAG’s approach to compensation is based on the following principles:

(i) If homeowners who would otherwise wish to remain in their homes, conclude that they are compelled to sell because they can no longer occupy them, they should have the benefit of the Express Purchase Scheme. This should extend to all properties in the Euston area which will be subject to “significant adverse effect”.

(ii) If home owners want to move, but are unable to do so without incurring unacceptable loss, they should be covered by the Voluntary Purchase Scheme. If they are forced to fall back on the discretionary Need to Sell Scheme this must be modified to address the manifest flaws in the scheme.

(iii) HEAG’s desired outcome is to bind the community together through 17 years of unprecedented construction works. This best achieved through mitigating the impact of the construction works and compensating residents through a “Euston Cash Offer”. It must be recognised that mitigation measures can only reduce, and cannot eliminate, the adverse impact of the construction works.

2. The Principles behind our Proposals

2.1 The Promoter has suggested a number of reasons for the disparate treatment of urban properties impacted by construction:

(i) The State does not compensate for the adverse impact of construction works. The Land Compensation Act 1973 was introduced to address the blight caused by the construction of motorways. It is ill equipped to address the impact of bringing HS2 into a densely populated high density area such as Euston. This is the largest construction project in Europe, and the impact on Euston is unprecedented both with regard to the duration and the impact of the construction works. Many of the works will be executed at night, over weekends and over holiday periods to minimise the impact on existing rail users. Whilst residential mitigation measures may reduce the impact on the 1,300 properties to be subjected to “significant adverse effects”, this will provide no protection when residents open their windows, sit in their gardens or go about their day-to-day activities in their neighbourhood. The practical difficulties of designing and implementing devising acceptable residential mitigation measures for individual dwellings may result in many residents declining the mitigation that is offered.

(ii) The Euston area will benefit economically from the new railway. No evidence is adduced to support this proposition. The Euston area is already a high value area, close to Central London and with excellent transport links. The reality is that most residents in the area will not see the completion of the scheme. The area will continue to be blighted until the scheme is completed.

(iii) Those living in the area are used to noise from the railway: Euston is a quiet residential area. It is not the noise from the railway that it is the problem; it is rather the construction works.

(iv) Those living in urban areas are used to construction works: These works are of an unprecedented length and intensity. Kings Cross is no precedent, as it was largely a brown field site. The Victorians always built their new railways on the edge of urban conurbations.

2.2 HEAG suggests that the following principles should underpin any compensation package:

(i) The compensation that falls to be assessed and paid as a result of the HS2 scheme must be fair and proportionate and arrived at by a process which gives proper weight to the interests of all those affected by the scheme. The Promoter has failed to carry out any such assessment.

(ii) Compensation should not only be grounded in property rights. It must reflect the wider human rights which are undoubtedly affected the HS2 scheme. Long established communities will be destroyed, family and private life will be severely disrupted and every conceivable type of pollution will affect the environment for many years.
(iii) there should be equity between those living in rural and urban areas. Any disparate treatment must be objectively justified.

2.3 These principles are consistent with those outlined by the Secretary of State in his 2013 consultation, namely: (i) Fairness; (ii) Value for Money; (iii) Community Cohesion; (iv) Feasibility, Efficiency and Comprehensibility; (vi) Functioning of the Housing Market; (vi) The Best Balance between these Criteria.

2.4 One of the stated reasons for the “Alternative Cash Offer” is to encourage people to remain in their communities so that communities can ‘thrive’. This principle applies equally to those who live in the Euston area. We have a number of distinctive and vibrant communities. It is very much an area at ease with itself. Those communities now face a unique threat.

3. Our Compensation “Asks”

(i) The Express Purchase Scheme

3.1 The “Express Purchase” scheme should be extended to the Euston area in respect of the 1,300 properties in locations where there are “predicted unmitigated significant adverse residual in-combination effects” will continue well in excess of twelve months. These are the homeowners who may be forced to move because of the adverse impact of the construction works. In such circumstances, they should not only be able to sell their properties without loss, but also have the benefit of “home loss” and “disturbance” payments.

3.2 HEAG accepts that once the construction works have been completed, there will be no significant long term impact on property prices for most properties in the Euston area. Such a decision would not necessarily be a costly one, given the long-term value of the assets that the government might acquire. However, there are some properties on which the Promoter accepts that the operation of the scheme will have a major adverse effect on the amenities of residents which will be permanent and significant. For example, properties at Cartmel, Coniston, Langdale and Augustus House are identified26.

3.3 The Park Village East Heritage Group will be making more detailed submissions on the Express Purchase Scheme. HEAG notes that there are a number of other properties in the Euston area which are in a similar position to the Nash Terraces in Park Village East, whether in Cobourg St, Mornington Terrace, Regents Park Estate (including Cartmel), or in Ampthill Square.

(ii) The Voluntary Purchase Scheme

3.4 The “Voluntary Purchase” scheme should be extended to the Euston area in respect of all properties within 120m of the construction works where the home owners want to move, but is unable to do so without incurring an unacceptable loss. HEAG would define “an unacceptable loss” as 15% or more of the unblighted value, having regard to both the current value of the property and the price at which the property was originally bought. If the homeowner is able to establish this, the government should be required to purchase the property at its unblighted value.

3.5 HEAG does not believe that homeowners in Euston should be required to establish the additional requirements under discretionary Need to Sell Scheme where the property is identified in the SES as suffering significant adverse effects necessitating the installation of mitigation measures within the home.

(iii) Need to Sell Scheme

3.6 The Promoter should be required to relax four of the five conditions that must be satisfied for the “Need to Sell” scheme:

3.6.1 No prior knowledge – applicants must have bought their property before 11 March 2010

This rule must be relaxed given the uncertainty and the Petitioner’s changing plans for Euston. HEAG proposes that it should not apply to any purchaser who purchased their property between 11 March 2010 and the date of the Royal Assent, provided that the homeowner is able to establish that they purchased their property at an unblighted price.

This 11 March 2010 “without knowledge” rule will have a much greater impact on urban, rather than rural areas, given the greater turnover of properties and the uncertainty about the government’s plans for Euston. The extent of the impact of HS2 on Euston was only known when the AP3 proposals were published on 8 September 2015. Last year, HS2 only seemed to blight the top range of the local property market. Evidence suggests that more properties are now being blighted. Blight will take hold when the construction works commence. This will then continue until 2033 or when the construction works are finally completed. The current rule will merely “bake the blight”. When construction works start, purchasers will not only be deterred by impact of the works. They will also know that their ability to sell will be handicapped by their exclusion from this scheme.

This issue has been raised by the Residents’ Commissioner in her Fourth Report. David Higgins responded on 25 August in these terms27: “We recognise the Residents’ Commissioner’s concerns about eligibility for some of the property schemes. At the moment, this includes a requirement for applicants to have no prior knowledge of HS2 when they purchased their property. This principle is in place to protect the schemes from being exploited or seen as a profit-making opportunity. It is a complex issue but we are having ongoing discussions with the mortgage industry and the DfT to see if the ‘no prior knowledge’ criterion can be improved in future.”

3.6.2 Effort to sell – applicants must have marketed their property without success for at least three months, with no offers within 15% of a realistic (unblighted) asking price
The average price of a property in the area is £1m. A homeowner of the average home will be expected to incur a loss of £150k, before they can benefit from the scheme. A homeowner may need to sell their home to fund their retirement. It is not reasonable to expect them to incur such a substantial loss. Those entering the property market in Euston may have committed themselves to mortgages of up to 90% to fund their purchases. This rule could leave such home owners with a negative equity. We suggest that there should be a discretion to waive this rule where an applicant is able to establish exceptional financial hardship.

3.6.3 Compelling reason to sell – a compelling reason to sell the property now, or that the applicant would be placed under an unreasonable burden if unable to sell their property in the next 3 years.

We agree with the Select Committee ([116] of their First Special Report) that this rule is too restrictive and should extend to anyone with a justifiable reason to move, including those motivated by their “age and stage” in life.

3.6.4 Property type – owner-occupier or ‘reluctant landlord’ – needing to rent the property as a result of HS2

The rateable value limit of £34,800 for businesses in London should be increased to £135,000. The HCSC noted that the rateable value cap was not appropriate in the case of London businesses; too many would exceed the cap. This has a particular impact on Drummond Street where many of the double fronted business units have rateable values in excess of £60,000.

In their response to the report, the government did not address these paragraphs. However, on 21 March 2016, HM Treasury issued a “Consultation on Further Reform of the Compulsory Purchase System”. This proposed a higher rateable value limit for servicing a blight notice within Greater London. However, it considered that further research was required on the appropriate limit. Camden Council has now provided that research.

This scheme should extend to all property owners, including those who rent out their properties. For a number of local residents, this is their pension pot. Rents are likely to slump as a consequence of the construction works. Many landlords have purchased properties to fund their retirement and with the assistance of a mortgage. The slump in rents could result in the rental income being insufficient to service the mortgage. Property blight could preclude the landlord from selling.

3.6.5 Location – no fixed outer boundary, but impact of HS2 must be established.
We have no recommendations to make in respect of this fifth condition.

(iv) A Euston Cash Offer

3.7 HEAG’s desired objective is to bind our diverse and vibrant community together through some 10-25 years of unique disruption. HEAG therefore proposes an annual cash payment to any household who will be significantly and adversely affected by the construction works.

HEAG proposes payments in the following sums:

(i) £3,000 per annum to the 1,300 households in locations where there are “predicted unmitigated significant adverse residual in-combination effects”. These households are identified in [14.3.13] of the SES and map numbers SV-06-001 and 002 (30.3.16).

(ii) £1,000 per annum to those households who will be subjected to “significant adverse effects”. This is likely to include an additional 2,000 households.

3.8 HEAG has linked the proposed payments to the extent of the adverse impact of construction works. We note that the “home owner payment” for rural areas is rather based on distance from the line. On the basis of our proposal, we estimate that some 3,300 households would qualify at a cost of some £5.9m per annum. This would extend to some 40% of those who live within 300m of the construction works in the Euston area.

3.9 HEAG does not want residents to be forced to move away from the area which would fracture the social cohesion of our vibrant and diverse communities. To date, the Promoter has been deaf to our pleas for a compensation scheme that will achieve this. There is evidence that our community is starting to fragment. Some of our members have felt compelled to sell their homes before the construction works commence and both their lives and homes become blighted. The number of those choosing to leave the area will accelerate when construction works commence.

3.10 HEAG proposes that the payment should be made to any household with any “interest in the dwelling” where a member of the household has been in occupation of the dwelling as his only or main residence for a period of at least twelve months on the qualifying date for the annual payment. This should be defined to include any Rent Act protected tenant. This replicates the statutory entitlement for a home loss payment in Section 29 of the Land Compensation Act 1973.

3.11 This scheme would not only benefit home owners. It would also benefit long term social and private residential tenants. The Euston area includes a large number of social tenants who have occupied their homes for many years, some for all their lives. They are currently excluded from any compensation. The National Compensation Code is premised solely on property rights. HEAG’s approach rather focuses on the Article 8 right to respect for one’s home and private life.

3.12 This scheme would also reassure the local property market. It would

(a) reduce the impact of blight on property sales;

(b) reassure the private rented sector (some residents have let out their properties as part of their pension schemes); and

(c) reduce the danger that void properties would become hard to let for social landlords (Camden Council do not intend to reduce the social rents for their blighted properties in Euston).

It is to be noted that the government proposes to restrict the payment of the “home owner payment” in rural areas to those with a leasehold interest “for a certain term of years, not less than three years of which remain unexpired on the date that the application is signed” (see [2.3.4] of “Rural Support Zone Schemes – Guidance Notes and Application Form”.

3.13 As with the governments’ rural support zone schemes, the payment should also be made to owner-occupiers of business premises. A rateable value limit of £34,800 is inappropriate given land values in the Euston area and should be raised to £135,000.

3.14 There are precedents for such payments. In December 1999, Railtrack made cash payments ranging from £150 to £300 (depending upon the location and the nature of the property) as compensation for upgrading works to the West Coast executed over the Christmas period in the Camden Cutting. Gatwick is proposing to offering annual payments of £1,000 per annum to 4,100 homes, should it be permitted to build a second runway30.

4. The Fair Determination of Compensation Claims

4.1 The Promoter should establish procedures for determining claims for compensation which comply with Article 6 of the European Convention. Applications for compensation must be determined and payments made promptly. Strict time limits must be imposed. There should be an appeal to an independent and impartial body. Currently, there is only a right of appeal in respect of home loss and disturbance payments. The Land Compensation Act 1973 permits an appeal to the Upper Tribunal (Lands Chamber). HEAG rather proposes that all appeals should go to the First-Tier Tribunal (Property Chamber).

5. Community & Environment and Business & Local Economy Funds

5.1 The Promoter is proposing a Community & Environment Fund (“CEF”) and Business and Local Economy Fund (“BLEF”) which will have a combined budget of £30m for the period to 2026. HEAG asks that there be specific funds earmarked for Camden throughout the period of construction work, currently 2017 to 2033, with separate funds for businesses and community groups, with a total of £1m per annum for the two funds. HEAG suggest that the split should be £750k per annum for the Community & Environment Fund and £250k per annum for the Business & Local Economy Fund.

5.2 Whilst in rural areas, there may be an emphasis on projects which will leave a sustainable legacy, in Euston, the priority should rather be to address the adverse impact of the construction works. The emphasis should therefore be on projects which make life more bearable for all the diverse communities in Euston whose lives are blighted by the works.

5.3 The Promoter is proposing that the management of the funds will be outsourced to an existing grant-managed body which will be selected through a competitive process31. If the principle of a “Camden” fund is agreed, HEAG would ask that the funds should be administered locally with a strong community input. There are a number of charities who would be competent to administer such a fund. We agree that applications for grants should be invited from community-based voluntary organisations, charitable and not-for-profit bodies, social enterprises, schools and local authorities.

5.4 The HCSC recommended that the funding envelope of both funds should be substantially increased. It suspected that the Promoter is aware that the amounts are too low. The Committee wanted to see specific allocations to certain communities to avoid bidding wars. In its response, the government has agreed to increase the funding to £40m. It is proposing indicative allocations and proposes to publish them before the end of the Lords’ Select Committee hearings.

5.5 HEAG welcomes the proposal (1.9.16) for a £3.5m Camden Fund. We welcome the invitation to nominate a member of the local community to the Board. We note that the adequacy and utilisation of the £3.5m allocation will be reviewed after two years.

5.6 However, HEAG is not sure how the Camden fund will relate to the CEF and BLEF. Our concern is that Camden applicants to the CEF and BLEF may be prejudiced because of the existence of the Camden Fund. In any event, the CEF and BLEF are time limited to 2026, whilst construction works in Euston will extend to 2033. HEAG prefers an annual budget, albeit that it might be front-loaded to facilitate projects which will be put in place at the early stages of the construction. An annual budget for the life of the construction works would impose a financial incentive on the nominated undertaker to complete the works expeditiously.

6. Conclusion

6.1 The Select Committee recognised that Camden is “exceptional and needs special treatment”. We ask the Promoter to recognise this.

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