Our team: Amanda Hado-Bodfield
Increase in land values: is it too early to benefit from the impact of Crossrail 2?
Now it has been given the green light, have house prices along the proposed line of Crossrail 2 started to increase, and where will the smart money buy?
Crossrail 2 would spur the regeneration of under-developed areas, such as parts of Enfield and Haringey, and poses significant potential for new housing and improved transport connections to and from central London from extended commuter belts as far as Hertfordshire.
Background and route:
Crossrail 2, a high speed railway scheme connecting north and south London
The two tracks across 47 stations are intended to connect the National Rail networks from Surrey (nine stations) to Hertfordshire (three stations) via new tunnels and stations between Wimbledon, Tottenham Hale and New Southgate. It will intersect with the London Underground (various points), Overground (Clapham Junction, Victoria) and Crossrail 1 (Tottenham Court Road) and HS2 (Euston St Pancras).
Despite protestations from some residents in places such as Chelsea and Wimbledon, who oppose
the level of disruption which accompanies major infrastructure work, it is supposedly on track to be delivered. In March 2016, the National Infrastructure Commission said that Crossrail 2 should be taken forward “as a priority” and recommended that a bill should pass through Parliament by 2019, with the line opening by 2033.
Should permission be granted, construction is expected to start around 2023. The project’s cost has been estimated at £31.2 billion.
The route has been slightly altered following public consultation but the near final route is set out in the route map and properties within 200 metres of the route are registered within the safeguarding boundary (revealed on a local authority and transport searches)
Cross rail 2: stage 1 – public consultation; planning and compulsory order stages
It is estimated that £5.5 billion has added to property values along the route of Crossrail 1 now called the Elizabeth Line (JLL 2016).
House prices within 750m of stations on the Elizabeth Line have outperformed the wider Local Authority markets by an average of five per cent since the line was granted Royal Assent in the summer of 2008 with some stations outperforming by as much as 40 per cent. Values have been boosted not only by the improvement in connectivity which will be provided by the line, but also in many cases regeneration (Knight Frank).
The Crossrail chatter has already influenced values and speculator activity is already happening even though planning has not been granted. Savvy investors are purchasing land to stockpile and then sell to housebuilders and developer at a profit at the right time (and seek any potential uplift with overage / deferred payment arrangements based on re-sale profits to end users post development).
Buy to let investors will also be banking on capital appreciation due to increased connectivity and travel time to the capital. Value in Seven Sisters, Haringey and Dalston has already been uplifted due to gentrification, but also the prospect of Crossrail 2. The properties directly around the station sites will increase the most (over and above the wider market) however, with investment in the wider community; price increases in the surrounding area should correlate.
Other locations which are poorly linked with Zone 3 are likely to be winners too, such as Broxbourne in Hertfordshire, Tooting Broadway and parts of Wimbledon. Commentators agree that when it gets going the impact will be huge and all areas along the route of the stations will benefit.
There are sections which are already considered unaffordable for the average London wage – properties within 750m radius of Tottenham Court Road, Victoria and the Kings Road are already valued at over £1M. However, other areas in which homes are still valued at below the £300k mark are set to a disproportionate benefit and increase, as they enter the gentrification cycle – Cheshunt, Waltham Cross, Enfield Lock, Brimsdown, Ponders Edge and Angel Row.
Crossrail 2: stage 2 – construction and tunnelling stage
Once the funds and government show its commitment to the project, this will trigger another wave of activity in land and existing property. At this stage one would normally see big retailers / supermarkets / restaurant chains and other amenity providers seeking to secure space, often off-plan and built to their specification.
Crossrail 2: stage 3 – project near completion / post delays
Conservative investors and home buyers will usually wait until the project is near completion before committing and taking advantage in the final upsurge in land values and house prices.
Crossrail Growth Commission’s report published in 2016 indicated that Crossrail 2 could unlock up to 200,000 homes in vital new areas for development and they are committed to working closely with the GLA, local authorities and other stakeholders to make sure these opportunities are maximised.
In order to meet predicted demand, London needs to build up to 62,000 homes per year – that’s equivalent to a new home every 10 minutes. Crossrail 2 is envisaged to be very much part of that incentive and commentators are predicting that there will be more winners than losers in that story.
If you require further information or legal advice on this topic or any other regeneration and development opportunities, please contact us. This article was written by Partner Amanda Hado-Bodfield.