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18/03/2013
Summary of HS2AA recommended Property Bond Scheme


Summary of HS2AA recommended Property Bond Scheme
1. Scheme Objective
The objectives of the scheme are:
2. To fairly compensate all those affected by property blight caused by HS2
3. To restore market confidence (reducing the property blight itself)
4. To avoid opposition to the project driven by the fear of large uncompensated losses
5. Recommended HS2 Property Bond Scheme
Eligible property owners apply to HS2 Ltd for a Property Bond that transfers with their property and applies until one year after HS2 is operational. The Bond will guarantee that HS2 Ltd will purchase the property at an ‘unblighted value’ (in their role as purchaser of last resort) if:
 The HS2 project has reached a specified trigger point, eg Hybrid bill; and
 No private buyer is found at the unblighted price when the owner wants to sell.
Eligible properties to be stamp duty exempt for the life of the bond (encouraging private sales). The Bond can also be used for re-mortgaging purposes.
Any unused Property Bond that applies at termination (ie in 2027 for phase 1) to a blighted property entitles the then owner to ‘loss in value’ compensation (as distinct from Part 1 LCA statutory compensation).
6. Recommended Scheme rules
Eligibility: property owners who suffer a ‘loss in property value’ due to HS2, and who move, re-mortgage or remain in their property until a year after HS2 is built and running (2027 at earliest)
Process: eligible owners can apply to HS2 Ltd for an HS2 Property Bond anytime after the start date, provided they meet the ‘general conditions’. The bond can only be redeemed from HS2 Ltd (for the ’unblighted value’) when the trigger point has passed – so only private sales until then.
There would be no qualifying reason for sale, restrictions on proximity, noise etc, or threshold loss. The sole test would be there being a financial impact on market value due to HS2.
Operation: to inhibit groundless sales applications some ‘general conditions’ must be met
 A property must have been marketed for a minimum period (determined by price bands)
 No ‘serious offers’ at blight-free value (with evidence to justify this value) be made
 The belief that its reduced value is due to HS2 must be reasonable and evidenced
‘Loss in value’ is market determined i.e. blighted price is based on what people will offer to pay.
‘Unblighted value’ is professionally estimated e.g. RICS ‘red book’ valuations. If the unblighted- value is not more than the best serious offer received, the owner pays the evaluation costs.
Appeals: an independent appeals process to operate for eligibility, process and valuations
Note: The Council of Mortgage Lenders have said they would support a property bond approach as it would allow for valuations at unblighted prices.
See a fuller description of the scheme, how it works, and response to Governments arguments against it in HS2AA January response to Phase 1 compensation; and on the HS2AA website

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