High Speed Two (HS2) Implications on valuations and property acceptability
The HS2 project is a massive engineering project. Their website is a source of interesting information and explains that the railway will link London and Birmingham to the East Midlands and Leeds. It will connect 8 of Britain’s largest 10 cities, with over 25 stations, connected by over 330 miles of track and its trains will potentially travel up to 250mph. Delivery will be in stages between 2026 and at least 2033 (and as it’s subject to further parliamentary agreement these current arrangements are not absolutely certain).
So what relevance has this got to do with Equity Release?
Infrastructure projects of this type can sometimes impact the properties in the vicinity of the new activity. Whilst this could apply to properties close to the 330 miles of HS2 track, it can also apply to other infrastructure projects such as the proposed new runway at Heathrow, or on a more local basis, a road layout change of any sort. The issue is that the change in environment can, or might, impact the current or future value of the properties nearby, leading to possible difficulty obtaining new housing finance, or causing nervousness from a lender, who may already have the property on its books, about any new lending.
The UK mortgage market is active and competitive. Within that environment it is up to each lender to define and quantify their own specific risk appetite, against any factors that impact a lending decision, for their business. That is the basis of a competitive market. One factor that is in this mix for the lender is the property valuation, and any supporting feedback from the valuers, when the valuation was taken, which helps quantify the risk level and value of the home being offered as security for the lending.
Projects such as HS2 offer many impacted property owners a range of compensations schemes. Some involve compulsory purchase or indeed voluntary purchase, both at agreed market rates, and others require the quantification of the impact, assessed once the project has delivered and compensated, as appropriate, at that time. With HS2, that post delivery point might be many years from now.
There is significant information on these compensation schemes and associated background information. Whilst many members may well be fully aware of this information, the links below may help those with a lower level of understanding of HS2, and perhaps help raise future awareness, if a more local infrastructure scheme impacted a property that may be involved in an equity release transaction. In either case, we believe that obtaining as much relevant information, at an early stage, can help ensure the most appropriate advice and support can be provided to consumers, potentially impacted by such schemes.
- HS2 website: https://www.hs2.org.uk
- HS2 compensation schemes for those affected. www.gov.uk/claim-compensation-if-affected-by-hs2
