LoginSubscribe to Alerts

Heathrow runway decision will have a huge impact on West London property market

Posted 26 October 2016 by Ben Salisbury

The decision to go ahead with a third runway at Heathrow Airport will have massive ramifications for the West London property market...

The decision to build a third runway at Heathrow could have a significant impact on house prices in the area and will also affect existing homeowners who live nearby.

750 homes near to Heathrow Airport in Longford and Harmondsworth  will be sold through compulsory purchase by the private company that owns Heathrow Airport, Heathrow Airport Holdings, as part of the expansion plans with homeowners being offered the market price for their property plus 25%.

A further 3,750 London homeowners will be given the option of selling their property for the same rate.

Construction boost

But there could be a boost for the construction sector with estimates that the approval of the third runway has delivered an £18bn “bonanza” to the construction industry.

Rob Weaver, Director of Investments at Property Partner, said: “There’s no shying away from the sad fact that this will be detrimental to those immediately very close to the runway - there will be more pollution and more noise. However, the benefit to the greater area will be huge, particularly alongside the future Crossrail stations at Hayes and West Drayton.

“The creation of construction jobs in the short-term, airport jobs in the long-term - and all the nearby secondary industries (such as hotels), will push up employment and property prices. I personally live near the area, and my house is under one of the flight paths, but I still believe that there will be far more winners than losers.

"Perhaps more importantly in the wake of Brexit, the Heathrow decision should light a giant neon banner over the UK that we're open for business."

Impact on house prices

However, experts have warned that house prices in the area will be hit hard by the decision and prices for properties near the Airport could fall by 20% or more because of an increase in noise and air pollution and other factors which could make it difficult to sell their homes.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The proposal for another runway at Heathrow brings fear of the unknown. It is not just those homeowners who find themselves directly under the flight path who are likely to be affected but a much wider area.

“It is not just the direct costs but the indirect ones, such as the environmental issues which will have an impact on property prices. If the M25 is closed for six months or more, for example, where is the traffic going to go? You wouldn’t want to live in the large swathe of West London which will be affected by all the extra parking and traffic going down your road.

“Furthermore, there is so much uncertainty as it could go on for 35 years by the time the legal challenges are exhausted, which will have a huge bearing on decisions to buy or not to buy. Those wanting to sell could be in for a long wait if they don’t want to virtually give the property away.”

Consultation

Mark Hayward, managing director of the National Association of Estate Agents (NAEA), said: “Today's decision by the Government is likely to have a negative impact on house prices in the immediate vicinity of Heathrow.”

However, he advised homeowners not too act too quickly but to wait and see how the consultation process pans out.

"Alongside today’s announcement, the government has also released details of a fresh consultation, while the threat of judicial review still remains high.

"This means homeowners that will be impacted by the extra runway should not rush into making knee-jerk decisions, as they have time to assess their options."

The noise from aircraft at Heathrow is already factored into property values in the area. A two-bedroom property that is under the flight path already has a negative price difference of up to 10% to a similar property in the area that is not under the flight path.

Sam Bowman, executive director of the Adam Smith Institute, said: "We shouldn't feel too sorry for local residents".

“Their house prices will have been lower to reflect the inconvenience of living in the flight path, compared to similar houses in quieter areas and, for anyone who has bought a house in the past four decades, also to reflect the probability of a third runway being built.

“So the trade-off for them is cheaper housing in exchange for a bit more ambient noise from aircraft.”

Homeowners in towns such as Hounslow, Kew, Maidenhead and Windsor are likely to be particularly affected.

Russell Quirk, chief executive of estate agent eMoov.co.uk, said: “The disastrous implications for those affected are an increase in noise and air pollution rendering their properties undesirable to UK buyers. This reduced demand could see prices fall by 20 per cent or more as a result, creating a housing market that buyers won't want to touch.

"It’s great news for the UK economy and indeed those that frequently fly out of London for both business and pleasure.

"Not such great news for the hundreds of residents that will see their properties demolished as a result of the expansion of a third runway."

Compensation package

The market value of homes affected by a compulsory purchase order will be set by two qualified surveyors who have been instructed to ignore the adverse impact of the creation of the third runway.

One surveyor will be appointed by Heathrow Airport Holdings and one by the homeowner. The offer price will be the average of the two valuations. If the two valuations are more than 10% different a third surveyor will be appointed and the price will be set at the average of the third valuation combined with the other valuation that is closest to the third valuation.

There will also be a package of more than £700m for homeowners to pay for noise insulation and residents will be eligible whether they experience noise from existing or new flight paths.

The cost of moving will also be covered, including stamp duty, legal fees and removal costs.

A new area of affordable homes in London?

The proposal and creation of a third runway could create an affordable pocket of housing in the area. According to eMoov’s estimate of a 20% drop in house prices, this would take the current average house price in Hounslow from £407,666 down to around £330,000.

Sign up for email alertsGet the latest properties and updates sent directly to your inbox daily, weekly or immediately you are in control.
Subscribe to Alerts
Search news and advice

Click here to see your activities