Real Estate Blog: Keep off the Tracks: Development near Railway Lines, Infrastructure and Stations

In the second of two articles, Michael Bray looks at issues for developers carrying out works involving the redevelopment and upgrading of railway station infrastructure.

Some larger development and regeneration projects can involve upgrades to railway stations and infrastructure. Save for Network Rail Managed Stations (20 key stations, such as London Paddington and Birmingham New Street) and stations owned and operated by other infrastructure owners such as Transport for London, most railway stations are owned by Network Rail and leased to train operating companies. It is important to engage with the infrastructure owner and the relevant train operator tenant early in project development, especially if changes to ownership and lease boundaries are required and/or vacant possession is needed of part of the station building to carry out works. Valuable time can be lost if part of the station building is let to retail tenants who have security of tenure, or there are protected telecoms or broadband equipment that may need to be relocated or removed.

A framework agreement between the developer and the infrastructure owner may be necessary in order to establish the relevant ‘intention to redevelop’ ground under the 1954 Act, and any agreements with the train operator are likely to require the approval of the Department for Transport.

Careful consideration needs to be given to the role of the train operator and their covenants due to the significant structural changes on-going in the rail industry. It is entirely possible that the current operator may change hands and/or the train services are re-let by the Department for Transport before the development is complete, introducing a risk that any agreements with the original train operator may not bind successor operators unless they are suitably protected. This is part of a move away from the franchise model which has been in place since privatisation of the railways to a concession based model and new Passenger Service Contracts.

Post the Williams-Shapps Review last year (hailed the biggest change to the rail industry since privatisation in the 1990s), a new body known as Great British Railways will also soon be taking over rail infrastructure from Network Rail so careful thought needs to be given to the future enforceability of Network Rail covenants and obligations in any contractual agreements.

It is often also necessary or beneficial to bring in local stakeholders, such as local authorities who may have access to grant funding for all or part of any proposed station upgrade works.

For very significant developments and intrusions to railway assets, infrastructure owners may prefer to undertake works on behalf of (and at the cost of) the developer rather than permit the developer to use its own contractors.

Early engagement with the relevant parties and forward-thinking project management are key to successful development near to or involving railway infrastructure.

If you would like any further information in relation to the above, please do not hesitate to contact a member of Freeths’ property team and/or specialist transport sector team.

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The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.