So, Network Rail is aiming to increase private investment. Good news. The UK railway estate is large and ripe with opportunity. But practically, what are these changes likely to mean for investors and developers?
Firstly, rail property is and remains heavily regulated. Development and investment will be subject to statutory change and closure. Other property legislation including planning law and the Landlord and Tenant Act 1954 is amended for rail property. These are all unamended by the announcement.
Then there is the complex web of contractual and regulatory relationships. These exist between DfT, ORR, Network Rail, operators, stakeholders and other third parties. Essentially, they provide the framework to (1) manage performance of the network, (2) protect health and safety and (3) manage financial risk.
Finally, any third party investor needs to navigate their way through Network Rail's asset protection regime. Hopefully the reforms will make improvements in this area and Network Rail's new positive attitude is welcome but for the uninitiated the railways still require a considered approach and careful understanding.
Network Rail announced ‘sweeping new reforms’ on July 31 which are intended to enable third parties to become ‘heavily involved’ in delivering railway investment projects. At the same time it published the Unlocking rail investment – building confidence, reducing costs report . This makes 12 recommendations for increasing contestability with the aim of encouraging third party investment and infrastructure delivery. By the end of 2017 Network Rail's routes will publish 'pipelines' of projects they want to put out to market, and will work with government on producing a list of opportunities for third parties. This would start with smaller projects such as new stations, depots and car parks, which will be used to develop best practice criteria for larger projects such as improved rail links to support power plants or projects funded by local transport authorities.