Third runway at Heathrow gets lift-off: what does it mean for housing?

The UK government has officially announced its support for a third runway at Heathrow today.

After much discussion and delay, the government has confirmed that it has backed the proposal for a third runway at the London airport, expanding its capacity.

Transport Secretary Chris Grayling called the decision “truly momentous”, highlighting the improvement in connectivity “in the UK itself and crucially boost our connections with the rest of the world, supporting exports, trade and job opportunities”.

Indeed, the government says the expansion will bring economic benefits to passengers and the wider economy worth up to £61 billion. Up to 77,000 additional local jobs are expected to be created over the next 14 years and the airport has committed to create 5,000 new apprenticeships over the same period.

The controversial topic has been the subject of debate for years, with Mayor of London Sadiq Khan saying it is the wrong decision for both London and the UK, due to both costs and air pollution. MPs with constituencies near the airport have also opposed the idea, due to the impact upon their denizens.

Grayling today said that the scheme “will be subject to full and fair public consultation”.

“Of course it is also hugely important for those living near the airport,” he acknowledged. “That is why we have made clear that expansion will only be allowed to proceed on the basis of a world class package of compensation and mitigation.”

The project marks another major infrastructure development for the UK, following the launch of the ambitious Crossrail project and the HS2 high-speed railway linking London to the Midlands and Northern Powerhouse. While both of those are set to boost house prices, though, an airport is more likely to negatively impact values for property nearby. Some will also have to be removed to make way for the runway.

The government, though, has pledged a compensation scheme of £2.6 billion to help those whose housing is affected, from community support and insulation from noise to more direct tackling of the impacts of expansion. Indeed, homeowners facing “compulsory purchase” of their homes will receive 125 per cent of the full market value, in addition to stamp duty, legal fees and moving costs.

“While a person’s home is much more than bricks and mortar, it is vital that the Government honours this commitment to ensure that those impacted are offered some financial security for the years ahead,” comments Mark Hayward, Managing Director, National Association of Estate Agents.

However, Hayward also cautions those with property near Heathrow not to rush into anything just yet.

“Today’s decision by the Government is likely to have a negative impact on house prices in the immediate vicinity of Heathrow. However, alongside today’s announcement, the Government has also released details of a fresh consultation, while the threat of judicial review still remains high,” he adds. “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.”