Winners and losers from high speed rail

An article in the Daily Telegraph explains that High Speed Rail (HS2) will create winners as well as losers among homeowners and homebuyers because, even though only 1.2 miles of the line will be above ground in the Chilterns, it will affect local house prices for good or ill. David Newnes, director of LSL Property Services, owners of estate agents Your Move and Reeds Rains said: “For many  property owners in the Chilterns, one of the key selling factors – their surrounding natural beauty and peaceful countryside – will be removed forever. Many properties will be compulsorily purchased, but for those at the fringes of this zone, significant reductions in value of between 25pc and 30pc are likely.

“On the other hand, properties at the termini of the line will see their potential value soar.

Urban property values are generally determined by nearby amenities and are less likely to be affected by the prospect of construction noise. Especially in central Birmingham, which will be brought within easy commuting distance of London by the new line, we are likely to see values increase substantially.”

The fact that there are winners and losers is one of the reasons why existing tax systems need to be replaced by a tax on the rental value of  land. (LVT)

Under the present system, the losers are badly compensated at the expense of the taxpayer, whilst the winners trouser the gains. Under LVT, the winners pay more and the losers pay less. That is justice in action.

It may be that the scheme produces a net loss in land value. It would be nice to be able to make an approximate forecast so that decision makers could know whether the project was worth proceeding with at all.