HS2 faces a £ 500 million lawsuit over the valuation of London real estate

The British HS2 high-speed rail project is facing a £ 500 million lawsuit. It is alleged that properties in the center of London were undervalued, which they had compulsorily bought to make room for the train line.

Sydney & London Properties, which owns four office buildings and land in front of the terminus of the HS2 Euston rail line, has accused the government-controlled company of failing to take into account the region's remediation potential when purchasing the property.

HS2 estimated the site at less than £ 200 million, but Sydney and London said they were worth at least £ 700 million. This would be the biggest mandate in terms of value in the history of the United Kingdom.

The complaint will raise concerns that the cost of the railway line could more than double GBP 56 billion and pave the way for claims by hundreds of other angry owners who believe their country is undervalued.

Michael Gross, founder of Sydney & London Properties, which belonged to the Euston site until its acquisition by HS2 last August, said it was "preparing the case, which in itself takes a long time and costs millions".

He added that his allegation was partly due to the desire to help hundreds of households and business owners who do not have the money to seek redress against HS2, including several in the vicinity of Euston Station.

"HS2 has misled Parliament and deprived large and small beneficiaries of fair, timely and equitable compensation," he said. "I know that I am the biggest claimant, but I have proven success in similar situations of pro bono struggle for victims who could not take care of themselves. This project was maltreated right from the start for structural and financial reasons. "

HS2 said it was appreciated that "disagreements take time to resolve. We have been working actively with Mr. Gross's team for several years and are always looking for a fair deal for both landlords and taxpayers. "

Are budget estimates credible?

The case will substantiate allegations by HS2 whistleblowers claiming that the state-owned company has misrepresented its budget and misled Parliament about the cost of buying property along its planned route.

HS2 told parliament that it would cost £ 2.8 billion to buy the land for the first phase of the line to Birmingham, but executives in HS2 claim they were ousted after warning because it more than doubled would cost, in part not all properties were included.

In September, the National Audit Office announced that the estimated costs of HS2 Ltd's land acquisition for Phase 1 of the project tripled to more than GBP 3 billion in six years, and warned that costs could continue to rise.

HS2 Ltd was also criticized for delaying in granting compensation to residents after land was forcibly acquired. As a result, some businesses struggle to survive and homeowners depend on friends and family to stay in homes because they can not pay rent or buy new homes.

The only remedy for a claimant who disagrees with the assessment or who faces a delay in payment is the district court, which consists of a Supreme Court judge working with appraisers. The process is lengthy and expensive and beyond the means of most applicants.

How much does it cost in the end?

Michael Byng, an Infrastructure Consultant who has developed the method used by Network Rail to calculate his project costs, estimates that the cost of HS2 is likely to be almost double that of £ 104bn, including the extensions from Birmingham to Manchester and London Manchester Leeds

HS2 said, "HS2's land acquisition program remains on track and costs are in the budget."

Sydney & London, along with their partner Related, has spent $ 25 billion developing New York's Hudson Yards and acquired the 304,420-square-foot Euston site. He had his own plan for the redesign of a larger area around Euston, including shops and apartments, designed commercial offices and leisure. However, the company lost the competition to redevelop the site to Australian developer Lendlease, who has now commenced operations.

Even before the construction of HS2, Euston is overcrowded, providing more than three times the volume of passenger traffic it opened in 1968 after reopening. Although demolition work on the site has already begun, HS2 still has to submit a final plan for the station and has delayed the awarding of works contracts.

There are also concerns about how the station will handle passenger traffic without Crossrail 2, which is unlikely within the next decade. The call to end the high-speed rail project escalated when it emerged that the taxpayer-funded company is considering slower speeds and fewer trains as concerns about rising project costs increase.