UK Chancellor Rishi Sunak has announced a pivotal modification to the HS2 rail project, which, with the exception of the link from London Euston to Birmingham already under construction, will no longer proceed. This decision has raised significant questions about the implications for homeowners, businesses, and potential property investors. PropertyWire canvassed the opinions of several industry experts.
Sunak’s U-Turn on HS2: What it Means and Why it Matters
In a statement made at the Conservative Party Conference, Sunak marked HS2 as symptomatic of an outdated consensus. He argued that changes in the facts warranted alterations of plans, hence the direction switch with HS2. The rail system originally aimed to extend up to Manchester, but these later stages will now be scrapped.
Former Prime Minister David Cameron voiced concern over this decision, arguing that it may embolden views that suggest we cannot think or act for the long term as a country. Cameron took this as an indication of a potential wrong turn for the nation’s strategic planning.
Impact on Homeowners, Businesses, and Property Investors
Richard Flenley, a partner at law firm Charles Russell Speechlys, highlighted the prolonged uncertainty for regions where the HS2 was initially set to roll out. Owners of properties, which were under potential threat of acquisition for the project, now question whether they will receive compensation for any adverse impacts they’ve experienced so far due to the plan cancellation.
Noting the number of homeowners and businesses who for years felt trapped in a state of limbo, Flenley emphasised the sense of disillusionment many will feel about the HS2’s sudden partial cancellation. He raised the pertinent question of how “fit for purpose” the law currently is in striking a fair balance between enabling major infrastructure projects and protecting the interests of those whose properties may face compulsory acquisition.
Future Protection for Landowners and Developers
Jon Stott, Managing Director of Ardent, a property and consents management practice, expressed dismay over the decision, citing the impact on specific individuals and businesses and raising further questions about future safeguarding measures for landowners and property owners facing potential acquisition for major projects.
He cited the narrow statutory blight provisions and the often limiting HS2 discretionary hardship schemes, which have left many unable to sell their property. This state of “limbo” alongside safeguarding directions has largely prevented landowners from obtaining planning consent for development, affecting numerous parties over the last ten years.
Repercussions for the Construction Industry
The decision is also a significant blow for the construction industry. Tim Seal, Head of Construction at law firm Ridgemont, highlighted the practical implications for businesses that had been gearing up for Phase 2 of HS2, particularly those already contracted for the second phase. These businesses should now scrutinise their agreements, paying particular attention to what any termination clauses might stipulate should the government put the project on hold.
Rising Costs and the Road Ahead
Julian Worth, Spokesperson for CILT Strategic Rail Policy Group, discussed the budget overshoot on the project: A £55.7 billion budget was initially set for HS2 in 2015, but the cost was expected to exceed £100 billion.
Cost inflation due to factors like Putin’s invasion of Ukraine and changes in specifications are among the reasons cited for this budgetary increase. CILT recommended conducting a comprehensive review of HS2 costs by experienced professionals following best practices worldwide and more consideration for using specifications from existing schemes internationally.
In conclusion, the recent decision on HS2 has sent tremors through the property market and beyond, leaving investors, homeowners and the construction industry grappling with the repercussions. The move signals the need for change, both in protecting those affected by such infrastructure projects and in better managing the costs associated with them.