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HS2 Phase 1 – Exceptional Hardship Replaced by Need to Sell ‘within three years’

Gateley Hamer

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HS2 recently announced their latest set of discretionary compensation schemes for property owners along the Phase 1 route.

The provisions have long been anticipated and as a result the reaction of the Select Committee members to the announcement was more interesting than the announcement itself.  Sir Peter Bottomley was particularly keen to leave the administrators in no doubt about how he expects the new Need to Sell scheme to operate, having been critical of the Exceptional Hardship Scheme that preceded it.

Criticism of the defunct Phase 1 Exceptional Hardship Scheme

Sir Peter has been consistently critical of what he considers to be shortcomings of the Exceptional Hardship Scheme (‘EHS’), which has been available for almost two years now.   The EHS required applicants to demonstrate an exceptional and urgent need to sell.  HS2 claimed that the application process was set up to ensure that applicants could use it without the need for assistance from surveyors or solicitors, but many applicants were overwhelmed by the volume of information required to validate their application, and ultimately only around a third of applications were successful.

HS2 regularly ruled that unsuccessful EHS applicants had not demonstrated a sufficiently ‘urgent’ need to sell.  Based on my experiences I would suggest that many decisions were inconsistent and the scheme did not provide sufficient scope for the decision-making panel to apply common sense.  For instance, one application I submitted was initially turned down on the basis that the 90+ year old applicant’s health was not poor enough to justify her urgent need to sell her property in order to move closer to family.  The family were trying to plan ahead and protect their elderly relative from being isolated when the time came for her to require more regular care and support, and yet the EHS panel were unable to accept the application due to the overly-stringent rules of the scheme.

Although it will continue to apply in relation to Phase 2, it is welcome news that the Phase 1 EHS has been replaced by a ‘Need to Sell’ scheme, which was opened to applicants on 16th January this year.  The Need to Sell scheme (further details of which are available here) should provide a lower test for would-be vendors.

Successful applicants to the Need to Sell scheme will have three years to decide whether to move

In addition to welcoming the dilution from an ‘exceptional hardship’ test under the EHS to a ‘compelling need’ test under the Need to Sell scheme, Sir Peter has made it abundantly clear that he does not expect applications to be refused simply because the decision-making panel feel that an applicant might decide not to move immediately upon their application being accepted.  His view is that an applicant’s need to sell may not necessarily be urgent, and successful applicants should be given up to three years to accept an offer. Following HS2’s announcement of the new discretionary measures Sir Peter responded on 16th January by explaining:

It’s my belief that people may have a compelling wish to sell, to be termed as a need to sell, where once they’ve got the offer, whether or not the price needs to be adjusted over time, they can, in effect, hold.  Which makes it more likely that an individual will remain part of the settled community rather than feeling they have to go. Because one of the public interests in all this is that people who don’t want to leave their community don’t have to. But unless they can get the certainty that they would be able to sell their home at an unblighted price, they’d probably feel they have to go, which will lead to more people leaving and a community being disrupted even more than would happen anyway.

In response to Sir Peter’s statement, Timothy Mould QC, acting for HS2, confirmed:

I have drawn attention to the fact that the scheme allows for an offer made under the Need to Sell Policy to remain open to acceptance, open to being taken forward by the successful applicant for a period of three years after the offer is made, and I am confident that those who are administering the scheme, and who are considering individual applications, will have that aspect of the scheme well in mind when they come to consider individual applications.

Sir Peter does like to be very clear about things, and he reiterated his expectation as he had the last word on this particular point:

‘Can I put it explicitly, not necessarily for answer, but so it’s heard. I am going to assume, on behalf of those who may be affected, that no member of the Panel will say, ‘We will turn this down unless we believe that the applicant will want to take up the offer without delay.’

It will be very interesting to see whether Sir Peter’s warning is heeded and whether Mr Mould’s confidence in the scheme administrators is well placed.  No doubt we will report on our own experiences of the Need to Sell process in these pages over the next few months.

Further details of the new discretionary compensation measures applying to Phase 1 are available here.  Please contact me if you require further information or assistance in relation to any compensation matters on Phase 1 or Phase 2 of the scheme.

Gateley Hamer is regulated by RICS (Royal Institution of Chartered Surveyors)