HELPING HOMEOWNERS AFFECTED BY THE THIRD RUNWAY PROPOSALS AT HEATHROW



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See our timeline below for an indicative idea of what to expect and when. We are already at stage 5.

Stage 01

Stage 01: Heathrow proposals shortlisted

On 17th December 2013, the Airports commission shortlisted Heathrow’s proposals for a third runway. This date is relevant as it provides a cut off point after which homeowners buying in the affected area are not entitled to the enhanced package. The exception is if the homeowner bought off someone who was entitled to the enhanced package.
Stage 02

Stage 02: Government initial support

On 25th October 2016, Government announced it’s in principle support for the third runway to be built
Stage 03

Stage 03: National Policy Statement

Across 2017 and 2018, a National Policy Statement (NPS) submitted by Heathrow was considered by Government. With far more detail then available, Government reiterated its support for the third runway, with a huge majority of 415 in favour of 119 against.
Stage 04

Stage 04: Judicial Reviews

On 1st May 2019, all five Judicial Reviews aimed at challenging Government support for the third runway were defeated in court. Of the 26 points that were considered, 21 were held to be not arguable and the remaining 5 were held not sufficient to block the plans.
Stage 05

Stage 05: Main Consultation exercise

On 18th June 2019, Heathrow launches it’s 12 week Statutory consultation on its’ Masterplan. This includes how it intends to deal with homeowners and as such, we provided our own consultation response on behalf of our homeowner clients.
Stage 06

Stage 06: Bond scheme interest

Qualifying homeowners are able to express an interest in the bond scheme. This applies to both those who would receive the enhanced package and the statutory package. Expressing an interest does not commit a homeowner to take the terms of the bond but we expect that the vast majority will do.
Stage 07

Stage 07: Bond scheme valuations

Two Valuations will be carried out to determine the Market Value as of the date that the interest in the previous stage was officially expressed. Heathrow will choose someone off their panel to provide a valuation. Homeowners can also choose someone that Heathrow has appointed if they wish or they can choose their own Chartered Surveyor to carry out a valuation for them. That’s what we hope you’ll do if you’re reading this and considering which Surveyor to appoint. Our duty of care if appointed would solely to be to you, albeit the opinion of Value we express has to be an honest impartial one.   If the values are within 10% of each other, the average is taken. If more than 10% apart, a third valuation by a Heathrow appointed Chartered Surveyor shall set the Market Value element of the package.
Stage 08

Stage 08: Enter into a bond

Once the Market Value element of the compensation is set, the homeowner will have the option of entering the bond scheme at that value or choosing not to. If they choose not to, only the statutory package will be available. If the bond is entered into, the homeowner cannot object to losing their property but can if they wish make other representations on the Development Consent Order.
Stage 09

Stage 09: Development Consent Order (DCO)

In approximately mid 2020, Heathrow are likely to make their Development Consent Order. This is their application to Government for Compulsory Purchase powers and also for Planning permission for their proposals. This process is likely to take about 12-18 months.
Stage 10

Stage 10: Decision to proceed by Heathrow

Once the Development Consent Order powers are granted which is highly likely, Heathrow will need to decide whether or not to proceed. It is again highly likely that at this point they will do. However, they would of course look to undertake a further budget analysis to ensure that it is worthwhile continuing. We expect that they almost certainly will do.
Stage 11

Stage 11: Bond scheme rights can be exercised

There will be a period of time within which those homeowners who have taken a bond will have the ability to exercise their rights under it to sell. We are pressing for as much flexibility as possible for homeowners. If the bond is exercised, the indexation of the Market Value will then be calculated. This means that if the Land registry suggests the market has increased by say 5%, the price will increase by 5%. Similarly if it suggests that the market has fallen by 5%, the price will fall by 5%. The enhanced package of 25% or the statutory package of 7.5% or 10% will be applied to the price AFTER indexation.
Stage 12

Stage 12: Sale and Disturbance compensation claim

Once the property has sold, there will be an entitlement to Disturbance compensation on an evidenced route. This is for the ability to reclaim costs such as Stamp duty, solicitors and mortgage arrangement fees. See our guide to Disturbance here
 
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Heathrow’s third runway proposals have no doubt created an uncertain time for homeowners and an anxiety around what will happen next. Their consultation is amongst the most wide ranging and exhaustive of any that we have known but undoubtedly, homeowners will still have more questions. How much someone sells for is crucial if the third runway proposals are to treat homeowners in a fair manner. With challenging market conditions, knowing how much your budget is and being able to sell and buy elsewhere efficiently is essential for homeowners.


 

Helping homeowners relocate

Finding somewhere to buy can be both challenging, fun and sometimes stressful. When the time comes to look, let us help you by putting suggestions forward of properties we believe may be suitable. We’ll discuss your budget and requirements and do some of the running for you. Think of us as your very own ‘Kirsty and Phil’ service from Location Location Location but with more hair and less banter.

We’ll also liaise with solicitors, mortgage brokers and Heathrow’s own relocation team to help you where we can.

Valuation

We shall provide a very comprehensive Market Valuation report to our homeowner clients, identifying Market Value and backing up any suggestions we make with appropriate evidence. Our duty of care is to homeowners who appoint us and the level of our valuation shall be independent and impartial.

There will be two Market Valuation reports provided. Heathrow will appoint a firm of Chartered Surveyors from their panel. Homeowners can appoint a firm at Heathrow’s expense.

Advising on the process

As the Development Consent Order tracks through Parliament and your own bond scheme price fluctuates with the market, we’ll keep you informed providing accurate and up to date information.

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We recognise that you have a choice of which Chartered Surveyor to use. We expect that most homeowners will choose to appoint their own rather than using Heathrow’s panel of companies it chooses.

In Sawyer Fielding, you will be appointing the most experienced team of residential Valuers under Compulsory Purchase in the UK. Heathrow suggest that homeowners appoint a firm with Compulsory Purchase experience. Well firms don’t come more experienced than our team who have negotiated over a thousand deals.

Because of our understanding of the Development Consent Order process, we will be able to advise you each step of the way what is happening and how it affects you.

Because we expect to represent large numbers of homeowners, our database of transactions to base our evidence on will likely be larger than any other company you could choose.

Lastly, we know what you’re going through and how we can help. Our Director Dan Knowles MRICS lost his own home to Compulsory Purchase years ago and has instilled a professionalism and empathy in his team.

We believe we’re the best and hope you’ll be impressed with the service we offer.



...AND YOU MAY ALSO  BE ENTITLED TO

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First off, let’s be clear to correct one common misunderstanding. Disturbance compensation and the 25%, 10% or 7.5% resident or non resident owners receive are completely separate. Qualifying homeowners receive both.

Disturbance compensation is to cover certain costs and losses associated with selling, moving or buying. The table below gives some examples of typical items of claim. It is indicative only so please do speak with us to clarify exactly what you’d be entitled to.


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HOW TO claim DISTURBANCE compensation


Evidenced Compensation

This is where you get your receipts together and submit a claim after you have sold. We can of course help with this too, providing the legal basis for each element of claim that we believe should be paid for.


There are three other key principles of disturbance compensation that it is worth BEING AWARE OF
 
When you can claim

Six years after you have sold or your property has been taken through exercising of Compulsory Purchase Powers, you will lose the right to an Independent binding assessment of the claim. This means if agreement has not been reached, you would have no right to refer the matter to the Independent Lands Chamber.

We have known one landowner (thankfully not a client of ours) lose over £500,000 because he did not agree his claim or refer the matter to the Lands Chamber in time. The acquiring authority reassessed the claim as £nil and there was nothing that could be done about it.

On a pragmatic basis, the Lands Chamber which is also available to resolve a disputed Market Value, is too expensive and time consuming to be worthwhile. It can often take a year to get a judgment and may cost tens of thousands of pounds. Both sides should use the Chamber only as a very last resort.

For non resident owners, their replacement property must also be acquired within one year of when they sold or were dispossessed under the Compulsory Purchase. It must also be an equivalent investment property.

Contract terms

Strictly, disturbance compensation entitlement does not materialise until a property has been lost to Compulsory Purchase. However, most acquiring authorities will suggest that they buy properties on Compulsory Purchase terms. When there is an agreed sale, entitlement to disturbance compensation is then governed by the sale contract. We will always provide some wording to solicitors that we recommend is incorporated into the sale contracts.

Do make sure that your solicitors follow through with this. It is important as we have known some refuse to pay out on items because their contract says something slightly differently.

Equivalence

Disturbance compensation is all about equivalence – making sure you are no better or worse off. For example, stamp duty is typically paid but only up to the amount if you bought somewhere with the same Market Value that you sold at.


 
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ENHANCED PACKAGE


ENTITLEMENTS

If entering a bond scheme on an enhanced package, entitlements are:

1) Market Value

2) Extra 25% of Market Value

3) Disturbance compensation

4) Solicitors and Surveyors fees

WHO QUALIFIES?

Resident owners who occupied on 17th December 2013, did so for at least 6 months immediately prior to then and live in the property immediately prior to making the application to join the bond scheme.

Anyone who bought the property off someone who would qualify above.

If the property was empty on 17th December 2013 but you lived in it for at least six months in the one year prior and you occupy it when making the application to join the bond scheme, you also qualify.

The above applies whether you are in the Compulsory Purchase Zone (CPZ) or in the Wider Property Offer Zone (WPOZ)

STATUTORY PACKAGE


ENTITLEMENTS

If entering the bond scheme, selling without a bond or losing your property to Compulsory Purchase on the Statutory package, entitlements are:

1) Market Value

2) Extra 10% for resident owners (subject to a cap of £64,000*) or 7.5% for non resident owners (subject to a cap of £75,000) **

3) Disturbance compensation

4) Solicitors and Surveyors fees

 

*cap is increased most years on October 1st. This is correct up till at least September 30th 2020

** assumes property owned at least one year at the point agreement for sale is reached

WHO QUALIFIES?

Anyone in the Compulsory Purchase Zone who does not qualify for the Enhanced package. Be aware though that if you haven’t owned for at least one year when you reach agreement, you will not be entitled to either the 10% or the 7.5% Statutory Loss payment.


If you are in the Wider Property Offer Zone and are not entitled to the enhanced package, you are not entitled to the Statutory Package either


 
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If you would like a member of our team to contact you to arrange a valuation inspection or merely to chat through any questions you have, please complete the below form. We’ll then get back to you as soon as we can.


 
 
 

 
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When buying somewhere, it’s important you understand how much your budget is. As well as the up front costs in buying, it is also worthwhile considering the annual running costs. For example, what’s the service charge, ground rent, council tax and likely utility bills? What about your travel costs in getting to places you regularly attend such as your children’s school, your place or work, hospital or local shops.

The below illustration is indicative for the up front costs. It does not include items that can be reclaimed in disturbance compensation but you should consider these carefully as for some people paying them is a problem, even if they are later reclaimed.


 


 
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Stamp duty is the tax paid when buying a property.

Under Compulsory Purchase rules, it is normally recoverable up to a cap of whatever the rate would be if you were buying somewhere the same price. For example, if are selling your main home at £300,000 and bought somewhere the same price or less, you would be entitled to recover the full stamp duty you pay in disturbance compensation. However, if you bought somewhere else at a higher price, you would pay the difference. If you bought at £400,000, you would be paying £10,000 but only recovering £5,000.

In our budget calculator above, the stamp duty not recoverable here would be a further £5,000 (£10,000 minus £5,000). However, if you are buying a shared equity property, often we are able to negotiate the excess stamp duty is also payable by whoever buys your property.

 
 
Our Stamp duty calculator below provides a useful explanation.

Your calculation
Please note: This calculator is provided as a guide only on how much stamp duty land tax you will need to pay in England and Northern Ireland. It assumes that the property is freehold and for residential purposes.

 

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