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MoD buys back 36,000 military homes for £6bn from private firm
The Ministry of Defence (MoD) has struck a deal to buy back around 36,000 military homes in a £6bn deal, almost three decades after selling them to property firm Annington.
The deal is expected to save the government around £230m a year in rental costs, amounting to more than £600,000 a day.
The original deal was struck in 1996 when the Conservative government sold 55,000 houses for an average of £27,000 per property.
Since 1996, the MoD has rented back the properties – called the Married Quarters Estate – at a discount on a 200-year lease. It has been responsible for all maintenance on the homes.
Defence secretary John Healey said: “The new deal is a decisive break with the failed approach of the past, which will save the public purse.
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“These important savings to defence pave the way for a substantial improvement and construction programme to provide high quality homes for armed forces families.
“The deep-set problems with military housing will not be fixed overnight, but this is a major step forward and a demonstration of our government’s intent.”
The MoD said renting the properties from Annington had prevented it from being able to demolish properties or build additional houses for service families.
A report earlier this year revealed that Armed Forces housing is being “plagued” by damp, mould and pest infestations, while a Defence Committee report published last week found that two-thirds of service family accommodation need major work to meet modern standards.
Admiral Sir Tony Radakin, chief of the defence staff, added: “This deal is a crucial step in being able to deliver meaningful change for those who serve – an opportunity to regain control of the estate and move forward with substantial redevelopment and refurbishment.”
In 2022, the MoD explored the possibility of taking back ownership of the properties through enfranchisement rules, with a high court judge ruling that this was legally possible.
In September this year, Annington filed a claim against the UK government in the European Court of Human Rights over fears the Leasehold and Freehold Reform Act could affect the value of the properties.
The properties are now worth almost 10 times the £5.99bn paid, with the properties valued at £10.1bn by Annington when not subject to leases, the MoD said.
As the liabilities associated with the leases have been removed, this created “budgetary headroom to partially fund” the purchase and the impact on public sector net debt is £1.7bn, the department said.
All legal claims relating to the estate will be settled as part of the terms of the deal, Annington said in a stock exchange filing.
The Married Quarters Estate makes up the majority of the properties belonging to Annington, which was acquired by private equity firm Terra Firma in 2012 from Japanese investment bank Nomura Holdings.
The government estimated that the original 1996 deal has left the British taxpayer £7.8bn worse off. This figure includes £4.3bn in rent and 18,000 empty properties that have been handed back to Annington and sold on the open market, worth around £5.2bn in today’s valuations.
The exchange of contracts for the homes took place on 16 December and the transaction is due to close on 9 January.
Planning applications will shortly be submitted for 265 new homes at RAF Brize Norton, with further plans to be submitted next year for around 300 new houses at Catterick Garrison.
The government also said it was beginning work on a new military housing strategy, due to be published next year. The strategy will include developing an action plan to deliver a “generational renewal of military housing” and new opportunities for forces homeownership.
Earlier this year, prime minister Sir Keir Starmer promised to house all veterans and exempt all former UK Armed Forces veterans from the five-year local connection test, which restricts access to social housing if the applicant has no connection to the area. The new rule will come into force from today (18 December).
