Heathrow Expansion

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Despite the previous Prime Minister once saying: “the third runway at Heathrow is not going ahead, no ifs, no buts”, David Cameron’s party has reneged on the opposition promise made to Londoners, announcing that the extension will be built after all.

Mark Underhill, the National Operational Accounts Manager for Simpson Millar’s Conveyancing department, examines what the news means for homeowners on the new flight path.

Noise and disruption

In the face of growing concerns from campaigners regarding issues such as noise and the environmental impact a third runway at Heathrow will have, the expansion is set to go ahead.

The announcement was made by the Department for Transport, with a public consultation to take place before a final decision is voted upon in winter 2017-2018. The timeline continues with construction likely to begin, at the earliest, in 2020 and the new runway not to reach operational status before 2025. This may seem a long way off, but for those living in the areas the Heathrow expansion will affect – either where the proposed construction is earmarked to take place or under the new flight path – the concerns are more pressing.

In the first instance, the land where the runway is to be built will need clearing beforehand, which means that all the homes standing in the way of the expansion will be placed under a compulsory purchase order (CPO). Secondly, the nearby homes that aren’t subject to the CPO will be affected by the noise and disruption the airport’s increased capacity will now cause, which could have a dramatic effect on house prices. Some – but not all – of these homes will be eligible for a property compensation scheme.

Compulsory purchase orders

Compulsory purchase orders are used by public authorities when they wish to force a homeowner or business to sell their property. This is usually the case when the building in question stands in the way of a regeneration project or a significant construction. CPOs are only enforceable by public bodies such as local and highway authorities and cannot be used by any private company or individual in a bid to make you sell your home.

Many public bodies have, by Acts of Parliament, the power to issue compulsory purchase orders, requiring only the relevant Government Minister to sign it off. To gain approval the authority must demonstrate the requisitioning of the land has a ‘compelling case in the public interest‘, meaning it has taken and exhausted all reasonable steps beforehand to obtain the grounds upon which the property is built.

A compulsory purchase order is not necessarily the end of the story so far as the homeowner is concerned. It does not give the public body the automatic right to buy your house out from under you; only to apply to the appropriate government body to force you to sell. You are within your rights to challenge the order by initially writing to the government minister responsible, voicing your objections, and then challenging the decision via the High Court. It is important to seek independent legal advice when disputing a decision, to ensure the correct procedures are carried out and your strongest case is made.

Under the terms of a compulsory purchase order, an authority is only obliged to pay the market value of a property, although you are entitled to negotiate for a better price.

Heathrow property compensation scheme

Heathrow’s compulsory purchase scheme was announced long before the go-ahead was given and, following a public consultation, the compensation offer in place was extended to communities living outside of the CPO boundary.

These additional homes, which would’ve borne the brunt of the disruption a new runway would cause, are now entitled to the same offer as those set to be forcibly acquired, should they wish to accept it. The offer is:

  • The unblighted market price (value at time of sale were the runway not being built) plus an additional 25%
  • The normal costs associated with moving house, including stamp duty, conveyancing fees and removal.

The bought homes within the widened boundary that are not subject to compulsory purchase have been earmarked for refurbishment, sound insulation and eventual re-selling, with local authorities and social housing organisations already expressing interest in buying. The compensation scheme in its entirety covers approximately 4,500 homes.

Mark Underhill comments:

“Regardless of the rights and wrongs of Heathrow’s third runway, the expansion will doubtless influence house prices in the affected areas, which makes the compensation offer all the more important.”

“It is a good thing that Heathrow has listened to the concerns of those outside the compulsory purchase boundary and extended the compensation scheme to areas immediately beyond. Even so, it may offer little comfort to those who don’t wish to be torn away from their homes and communities. Nevertheless, the alternative is to stay put and risk the value of your home hitting rock bottom, once the expansion is up and running.”

“The Heathrow compensation scheme is set to begin once construction on the new runway has started, remaining open until a year after the runway is operational, when no further purchases will be considered. As the offer is for the unblighted market value at the time of sale, it might pay for residents to wait until this final year before accepting the offer, as house prices might well have increased in the proposed 5 years the build is expected to take. Unfortunately, for those subject to the compulsory purchase order there will be no such luxury.”

“And then there are those living just outside the compensation boundary, who will doubtless suffer a degree of inconvenience as a result of Heathrow’s third runway. The extent of this inconvenience and the effect it will have on house prices remains to be seen, but whatever the outcome, they regrettably have no course for redress under the present scheme.”

Written by Mark Underhill.

For more information on conveyancing and the services offered by Simpson Millar, please call:

0808 129 3304

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