While other topics have been at the forefront of UK politics since 2016, one issue that has been continuously in background and has recently raised its head above the parapet of debate again is infrastructure.
And it isn’t just topical in the UK. In the United States, President Biden is targeting massive national investment. The $2.25 trillion investment is being put forward due to the current condition on the nations network of infrastructure, which according to the American Society of Civil Engineering is sorely needed (CNN, 2021). The plans look to cover a wide range of issues from the road network, housing, water and digital infrastructure.
While not on the financial scale of the US, the UK Government is also planning significant expenditure into infrastructure and the creation of a new “National Infrastructure Bank” (City AM, 2021). The hope of the projects is to not just improve travel services and access, which you would expect to be the direct effects of a better rail, road and utility network. But fixing the UK’s infrastructure network is seen as to have additional benefits including helping the UK recover from the severe impacts caused by the pandemic, energy security, meeting decarbonisation targets, but also acting on the Governments long touted (but with arguably so far little action), levelling up agenda.
Lockdown and our rejuvenated value of space
Here in the UK, it is not just the cost of large-scale national projects that is often contentious. Being a small nation, communities by default are closer together, green belt is arguably a more sensitive area with a myriad of protection woven in-between.
This is important as the value of green space has significantly increased over the last 12 months. Lockdown has forced us to look closer to home for retreat. It has made us appreciate what is on our doorstep and what the great British countryside has to offer. When you’re only allowed out for 1 hour per day, that hour is hugely valuable. I know I would rather spend that time walking around a nature reserve, a country park or an ancient woodland, as opposed to the local high street.
One property trend is already reflecting this. Whether it’s a short-term response to the pandemic is yet to be seen, however, fueled by the stamp duty holiday, homeowners have already started leaving our urban centres and their suburbs in search of individual open space and the rural idyll. The last year has left many of us rethinking what is important to us, and what huge value we hold for green open space, the countryside and nature.
Large scale national infrastructure projects, whilst through special planning regulation need to off-set damage, they can inevitably lead to habitat loss.
The good with the bad?
With most infrastructure plans, especially those of national significance there will always be two sides of the discussion and a lot of contention. Enter High Speed 2. The construction of the High Speed 2 rail network has finally begun amongst a lot of controversy, opposition and money spent. Activists have dug tunnels and climbed trees in objection to the project.
Again, our renewed value and love for the green spaces and habitat near to our homes maybe another reason that makes this project less appealing to those near to the route. Despite the creation of new habitat proposed along the lines route, it will result in habitat loss. Focusing on ancient woodlands, the Woodland Trust, suggest up to 108 will be lost or damaged.
It isn’t just the environment that could lose out. There is already an acknowledgement that to some communities, the project will be damaging to house prices. In response, the government has set up schemes which gives some homeowners the option to sell their property to the government if the property is deemed to be blighted by the new rail link. Along the route, there are safeguarded areas, rural support zones and homeowner payment zones.
These support and payment zones are set areas. It is not really known to what extent (from an area perspective) what properties will be negatively affected. This then raises an important question; if house prices are affected beyond these set compensation zones, what will the government response be? Although a “Need to Sell Scheme” has also been set up for such instances, the first line of this reads, “You may be able to…”. (GOV.UK, 2021).
While these schemes look to make amends for the loss caused by the project’s development, it highlights the key fact that infrastructure can and does have a negative impact on people’s lives, property value and why when flagged as a potential issue, it should be properly investigated during conveyancing.
It is important to highlight that improved, modern and faster public infrastructure is also an enabler. It can improve social mobility, increase access to green open spaces and other amenities but also speed up commutes, allowing people to spend more time on the important things in life.
Crossrail 2 is a great example of how millions of people will benefit from the eventual completion of an infrastructure project. That is not to say that it doesn’t come at a cost. And a very significant one at that. Not only is Crossrail 2 expected to have been opened in 2018, now targeted in 2022, but it is also projected to be £4bn over budget (Guardian, 2020).
Who pays for this is also a big talking point. Projects of this nature are not national, they only have regional benefits, with a further “select group” of property owners getting an even bigger benefit. While reports on the impact on house prices differ by analyst, in 2017 Knight Frank suggested that house prices along the route within in a 10-15min walk to a station from the period of 2008-2016 out-performed the market by 7% (Knight Frank, 2017).
This being the case, purchasing property near to the line will likely not only provide the wellbeing benefits to some that comes with modern, faster, more reliable transport, but it will also likely provide a financial benefit.
Green Investment, the heart of modern energy generation
One of the key elements of infrastructure spending across the next decade will be on green energy. The world is on the cusp of a potentially irreversible threshold for climate change. If significant action isn’t taken globally, this tipping point could be reached by the end of this decade (UN, 2019).
The Paris Agreement, a legally binding international treaty on climate change was adopted by 196 Parties at COP 21 in 2015 (UNCC, 2021). Coming into force in 2016, the Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels.
On the 27th June 2019, the UK became the first major economy in the world to pass laws to end its contribution to global warming by 2050. The target will require the UK to bring all greenhouse gas emissions to net zero by 2050, compared with the previous target of at least 80% reduction from 1990 levels (Gov.uk, 2019). While the UK had made strides in emission reduction already, to reach net zero by 2050 significant action will be required across a whole range of industries from construction to food waste, transport to energy production.
At the end of last year, the government announced its ten-point plan for a green industrial revolution, totalling a £12billion public investment. A large focus of this will be on wind energy generation as the Government hopes to quadruple the output of off-shore wind alone. Expansion in the renewable energy sector will be inevitable to meet the demanding and legally binding target. Nevertheless, a greater investment into renewable, sustainable energy and storage is not just a great thing for the long-term health of the planet, it also provides energy security for the UK.
However, while some would say it is fickle, what a potential property purchaser sees as “value” can and will vary from person to person. And there is president for linking wind turbines to a reduction in property value. In 2014, research undertaken by the London School of Economics concluded that large windfarms can impact property prices by up to 12% (Guardian, 2014). Whether you agree or not, it does confirm the value of full transparency of potential development that could occur in a property surrounds at the point of acquisition. Especially if that value is being based on a view that could be fragile and changeable.
What is being reported and is it reasonable?
Whether looking at energy or infrastructure projects, what is reported should be grounded and reasonable. The fact of the matter is that if something is identified or alerted, it needs to be for a good reason.
Crucially for this, Landmark environmental reports have fine-tuned the search radius of what they identify as a potential issue for a conveyancer to raise to their clients. Intelligently, an alert is not just based on the physical impact of a feature on an area, but also the subject properties location which is being transacted on. Rural properties are going to be a lot more vulnerable to large energy and infrastructure projects as opposed to those in urban areas. There is a lot of value to this as a report user as you have confidence that projects are not being alerted when it is very unlikely to be of concern.
Both Landmark’s Energy & Infrastructure report and their market leading All-in-One environmental report, RiskView Residential reacts to this, searching to a shorter radius in urban centres so not to identify an unlikely issue.
references:
(CNN, 2021) https://edition.cnn.com/2021/03/31/politics/infrastructure-proposal-biden-explainer/index.html
(City AM, 2021) https://www.cityam.com/budget-2021-sunak-pledges-22bn-for-new-infrastructure-bank/
(Guardian, 2020) https://www.theguardian.com/uk-news/2020/aug/21/crossrail-delayed-again-until-2022-and-another-450m-over-budget-tfl-covid-19
(Knight Frank, 2017) https://content.knightfrank.com/research/520/documents/en/2017-4695.pdf
(GOV.UK, 2021) https://www.gov.uk/claim-compensation-if-affected-by-hs2
(UN, 2019) https://www.un.org/press/en/2019/ga12131.doc.htm
(Gov.uk, 2019) https://www.gov.uk/government/news/uk-becomes-first-major-economy-to-pass-net-zero-emissions-law