New Heathrow runway

Heathrow expansion: Property prices could fall by 20%

Property prices in the London boroughs surrounding the new Heathrow runway could fall significantly, according to one development finance broker.

London mayor Sadiq Khan has already criticised the decision to give Heathrow a third runway instead of Gatwick, warning that it could cause noise and pollution problems.

Heathrow has announced it will be compensating property owners who are impacted by the new runway development.

Around 750 properties in Harmondsworth and Longford have already been earmarked for demolition once the airport acquires the land through a compulsory purchase order.

Heathrow’s compensation offer to those affected by the third runway includes a home loss payment of 25% of the unaffected market value, stamp duty costs of replacement property and reasonable legal and moving costs.

Plans for the new third Heathrow runway 

Speaking to Development Finance Today, Adam Challis, head of residential research at JLL, said the development would be a boost to the UK economy. 

Nonetheless, he warned of the impact the new runway could have on surrounding house prices.

“There will be some negative impact on house prices in the surrounding areas.

“Nicer areas could also see a negative impact.

“However, we shouldn’t lose sight of the importance the development would have on the local and national economy.”

Meanwhile, Bret Jackson of Finance 4 Business added: “The decision to award Heathrow a new runway is likely to have an impact on the surrounding area. 

“For example, Hounslow and Hillingdon could see a potential drop of up to 20% in the value of their properties. 

“This could cause a negative equity impact on some properties as it is one of the more affordable London boroughs with a high rate of first-time buyers.”

As well as a negative impact on surrounding house prices, Ashley Ilsen, head of lending at Regentsmead, said there could be other issues with the development.

“There have already been some quite farfetched suggestions about where and how to build the new runway at Heathrow – the last I heard it was going to be going over the M25. 

“This will also require close to 5,000 homes to be bought by BAA in order to make this happen.”

Bret questioned the impact the development could have on the London housing crisis, as he pointed out that more than 700 households would have to be rehoused. 

“With the housing shortage in London set to increase, I feel that both commercial and residential housing estates will be built within the new runway vicinity. 

“People will move to these properties, as [they] will be more affordable and still commutable to central London. 

“Of course, this is on the basis the runway gets built, which there is no guarantee of.”

However, Arwel Griffith, senior partner at Robert Sterling Surveyors, had doubts as to whether the new runway would lead to more property developments in the area.

“…Whatever small areas there are, will quickly be swallowed up by eager developers. 

“However, small sites are unlikely to cater for more demand, and that means outlying areas coming more under pressure from development. 

“It may mean that the protected areas of Slough come under threat, as [well as] areas in Windsor, Maidenhead, and Reading [coming] under more threat of butchery by private developers.

Arwel suggested that this could result in a conflict between planners and developers.

“This could lead local planners to act to protect nice areas more, but what’s for sure is that the ‘heavyweight championship fight’ is coming. 

“In the blue corner: the developer’s looking to make big bucks under the guise of meeting housing needs, while in the red corner: the big bad wolf, in the clothing of planners. 

“It’ll be one to watch, buy your ringside seat now…”

Ashley concluded by adding: “The problem with the great airport debate is that there were always going to be winners and losers whichever option they chose. 

“In truth, the new runway won’t be built for several years and it’s impossible to predict what state the economy and house prices will be in at that point.”

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