In the current uncertain political climate, it is distinctly possible that the HS2 railway will be abandoned, believes Alastair Frew, partner in Lodders’ Real Estate team. Here, he sets-out the main scenarios and shares his advice for landowners who have already sold land to HS2.
The HS2 project has already involved a huge amount of works and the HS2 company now owns large swathes of land up and down the route. The current political climate has brought with it an uncertain future for HS2, raising questions and concerns over what will happen to this land in the event that the line isn’t built.
There are various scenarios.
If the railway was merely mothballed, but not formally abandoned, then HS2 would simply retain ownership of all of the various landholdings. The scheme would technically still exist, albeit with no engineering works on-going.
If the railway project is formally abandoned, then the landholdings acquired by HS2 will be surplus. In this situation, the key question to consider is: Does HS2 / the Government have to sell the landholdings, or can it retain them as a long-term investment on behalf of the taxpayer?
To answer the question, we must discuss the “Crichel Downs Rules”.
Strictly speaking, the Crichel Downs Rules are judicial guidance, but they are treated as binding rules.
The Rules mean that if a parcel of land is acquired by HM Government or a statutory body under compulsory purchase powers, or under the threat of use of compulsory purchase powers, and that land then becomes surplus to its initial purpose, then the land must be offered back to the original landowner (or successor).
As ever, there are complications to the rule.
• if the land has fundamentally changed in its character, then the Crichel Downs Rules do not apply. So, if major engineering works have begun, then any affected parts of the land do not need to be sold back to the previous owner;
• if the land is occupied by a sitting tenant, then it is the tenant who has the right to purchase rather than the original seller.
When and if the Crichel Downs Rules do apply, the land must be sold back at current market value, so the taxpayer gets the best possible financial return.
In other words, if HS2 railway purchased land from you under compulsory purchase powers or while the land was subject to statutory blight, and the railway is formally abandoned by HM Government, then it must offer the land back to you at market value. In all likelihood, you will not be in a position to purchase the land, having moved on with your life and invested your money somewhere else, but it is important to know your rights and options.
I suspect that many major landholders or farmers, will by hook or by crook, possibly be able to raise the funds to purchase back the land.
However, individual homeowners are far less likely to be in this position.
Therefore, I predict that the stretches of the HS2 route that pass through open countryside will largely return into the ownership of the farmer and/or landowner that originally owned it.
However, at the London and Birmingham ends of the route, there will be huge swathes of land acquired from numerous individual landowners who will not be in a position to purchase their land back. HS2 will be free to sell this land on the open market, or to retain it in the HM Government portfolio.
If sold on the open market, particularly in the vicinity of Euston station, there will be a feeding frenzy amongst property speculators. The taxpayer will receive a substantial dividend, which may (or may not) defray some of the criticisms of the scheme.
However, for the numerous landowners who sold to HS2 railway in the early days of the scheme and during the “need to sell “phase, the Crichel Downs Rules will be of no assistance. These landowners sold on the open market to HS2 before there was any formal threat of compulsory purchase, and so the original owners will have no legal right to re-purchase the land.
For these landowners, there is the possibility that it will all be so very long ago that they actually won’t worry about the land and its potential re-purchase. Indeed, the ‘Need to sell scheme’ had at its heart an application by the landowner based on necessity, and the need for their lives to be allowed to move on. It would be somewhat perverse for these people to then seek to re-purchase their previous land or properties, when they have done exactly that.
I await the next steps and government decisions about HS2 with keen interest.
Lodders works with many of the landowners along the HS2 route in Warwickshire, the West Midlands, and further afield. Alastair Frew specialises in commercial property and advises commercial developers, housebuilders and private investors together with the banks and institutions that fund them.
For more information about HS2, contact Alastair Frew in Lodders’ Real Estate practice.