Exceptional Hardship Scheme

The Exceptional Hardship Scheme was introduced in 2010 for Stage 1 of HS2 with the goal of helping householders who couldn’t move due to HS2 and have a pressing need to do so. Its introduction was recognition that HS2 would cause significant disruption to property markets in the areas through which its route was located.

The Government stated the scheme would be an interim measure until permanent arrangements were in place to deal with those properties not needed to build HS2 but which are significantly blighted by the project.

The Government intends to initiate a very similar EHS scheme for Stage 2 of HS2-it consulted on proposals in Spring 2013 and intends to introduce them later this year. Again this scheme would remain in place until any permanent arrangements are in place.

HS2AA believes the Exceptional Hardship Scheme has let down the people it was designed to help. Applicants, even in the most dire circumstances, have been subject to seemingly random and unfair decisions-meaning it’s hard to escape the conclusion that EHS is all about doing as little as possible to help those in need.

There is no appeal procedure for applicants to the Exceptional Hardship Scheme-once a decision is made, that’s it and the only option open to people is to apply all over again.

What’s Wrong With A Hardship Scheme?

  1. 1. A hardship scheme supports only a minority of those who suffer loss in property value. Any scheme for which some – or indeed the great majority – are not eligible has serious deficiencies.
  2. 2. It traps most affected people in their properties – losing the freedom to move or remortgage without suffering serious financial loss for 15-20 years.
  3. 3. Generalised blight is exacerbated by the knowledge that losses would not be compensated when people want to sell (it is knowledge of full compensation for all those affected that injects confidence into the property market and controls blight).
  4. 4. The property market is paralysed, as sales crystallise losses in property values.
  5. 5. People will lack the very reassurance Government claim to offer ie that of fair compensation, – either they know they will not qualify or can’t be sure they will.

How Does It Work?

To qualify to have their property purchased via the Exceptional Hardship Scheme an applicant should:

  • Be a residential owner-occupier, small business owner (rateable value of £34,800 or less), owner occupier farmers or represent recently inherited/repossessed properties.
  • Live on or in the close proximity of the route and likely to be substantially affected by construction or operation of HS2. Properties over tunnels are only included if they are close to proposed entrances and exits.
  • Have an urgent need to move but cannot do so without accepting at least a 15% reduction from the unblighted market value.
  • Have a hardship reason for moving eg change of employment location; external financial pressure forcing a sale eg divorce, house possession; accommodate enlarged family; move into sheltered accommodation etc; medical condition of family member requiring urgent move. The reasons for moving are not confined to these examples.
  • Have made reasonable efforts to sell and the inability to sell is due to HS2 (not another reason) and had the property on the market for at least 3 months. Revised official guidance was issued in January 2011 that made it clearer that the marketed price must be realistic, competitive and take account of urgent need to sell (code for a price reduction!)
  • Had no offer within 85% of the open market value property price ie its unblighted value.
  • Did not know about HS2 when originally purchasing the property

Compensation is at the full unblighted value. This value is determined by averaging the valuations done by two independent valuers (if the figures differ by more than 10% a third valuation is done and the closest two averaged).

According to HS2, as at July 2013 there have been 474 applications to the EHS, with 51m spent on purchasing 85 properties. 312 cases (66%) have been rejected. 27% of the applications (130) are reapplications. 68 of the 85 properties acquired have been rented out.