The agency did not have official approval or draw up a business plan for the demolition. The National Audit Office (NAO) said that without such a plan it was impossible to know whether the destruction was justified.
Local residents complained that their houses were blighted by the demolition and that properties left behind suffered from traffic noise as a result.
The planned scheme to widen the A40 near Gypsy Corner and Western Circus in west London and to provide an underpass and flyover was approved in 1991. It was shelved by the Tory government in August 1996, and cancelled by Labour in July 1997.
In addition to the 200 houses that were demolished, the agency bought a further 26 homes in the area for pounds 131,500 each at today's prices, but sold them for pounds 81,100 each.
Although the houses were in good condition, there were fears of vandalism, the NAO said. "Most of the demolished properties were in fair condition and the local property market is buoyant," it said. "In demolishing the properties, the agency incurred security and demolition costs, wrote off potential rental income and made home-loss payments to existing tenants of up to pounds 2,500 per property."
The NAO report said the agency had raised pounds 238m since 1994 by selling property it bought in connection with road schemes, but the average price it got was just 68 per cent of the full, unblighted market value. Even where the schemes had been cancelled, the average fall in value was 27 per cent.
The time taken to sell surplus properties increased from 21 months in 1994-95 to nearly 27 months in 1998-99. Three-quarters of the properties sold on recently had been disposed of because the schemes had been cancelled.
Properties left empty for longest fetched the lowest prices. Those sold within a year fetched 19 per cent less than their purchase price and those left for 10 years fetched 37 per cent less. Sir John Bourn, head of the NAO, said more could be done to safeguard property value.
"Better maintenance, higher occupancy and faster sales would help secure better prices when properties become surplus and are sold," he said. The agency should let more of the properties to combat vandalism and deterioration, but for four years it had failed to meet its targets, filling three-quarters of properties instead of four-fifths. The chairman of the public accounts committee, David Davis, said the destruction of the 200 homes was "a real indictment of the agency", adding: "Habitable homes should never be demolished without careful consideration or without proper approvals."
The audit office said only one-fifth of properties bought between 1970 and 1990 had been demolished. A spokeswoman for the Highways Agency said it was implementing the NAO recommendations.Reuse content