Landowners criticise government on HS2 compensation
THE Country Landowners Association has challenged the Government over the rate of interest it pays on late compensation to businesses affected by major infrastructure projects such as HS2.
CLA President Henry Robinson has written to Transport Secretary Patrick McLoughlin after Transport PUS Robert Goodwill confirmed that HS2 Ltd charged 4.5% on late payment of rent from tenants who live in the 170 properties that HS2 owns, but will pay no interest at all to landowners when it is late in paying them compensation.
Mr Robinson said: “It is staggering that the same government department can maintain the double standard of charging interest on late rent while at the same time paying no interest to businesses who are suffering decades of disruption and loss at the hands of HS2.
“HS2 Ltd has consistently refused to pay a reasonable rate of interest on late compensation to landowners for compulsorily purchased land. Compensation is always late and often only settled many years after the land is taken. Being offered no interest adds to the financial misery of every business and individual long the route.”
The CLA President writes in his letter to the Secretary of State that under the outdated compensation code, landowners who receive compensation late will only be eligible for interest at half a percent below base rate, which is likely to be zero for some time and well below 4.5% for several years.
Mr Robinson said that if a landowner did not receive compensation on time they might be forced to take out a bank loan to finance the restructuring of their business, which would be at a commercial rate of interest of at least 4.5%.
Due to inflation, the value of late compensation will decrease over time and is not reflected in RPI or CPI figures but in the real costs faced by landowners purchasing replacement land and property, he added.
Mr Robinson said: “It is unfair that this disparity exists, especially when HS2 Ltd has the ability to be more generous. HS2 Ltd should be required by law to pay compensation before entry, as a failure to do so puts the viability of affected businesses at risk. If compensation is late, HS2 Ltd should commit to paying an interest rate of four percent, which is reasonable and more in line with commercial lending rates.”
