Hands' firm makes billions from military homes deal, amid claims the buy-back is unlawful

Thursday 19 December 2024

Guy Hands' company has sold 36,000 military homes back to the UK's Ministry of Defence in a deal worth almost £6billion - but the repurchasing plan will be challenged.

The properties were sold to Annington Property Ltd for a reported £3.2bn in 1996.

Annington was taken over by Mr Hand's private equity firm Terra Firma in 2012, and yesterday it was confirmed the MoD units were being sold back to the UK government for £6bn.

55,000 housing units for married service personnel had originally been sold by the MoD in 1996, on 999-year leases. It then rented these back on 200-year leases from Annington.

The following year, the National Audit Office reported that the MoD would have received better value by retaining the estate rather than selling it, and that much responsibility for managing the properties remained with the government. The '97 report is available online HERE. 

Pictured: The homepage of Annington Ltd, the company which had owned the properties in question, since the mid 90's.

Previously the deal has also been described as “disastrous for taxpayers” by the UK's Public Accounts Committee, which examines the value for money of Government projects, programmes and service delivery. In 2018 it voiced fears that it could be a worsening situation.

The PAC’s Chair at the time was Meg Miller MP, who has since gone on to become Chair of the Treasury Select Committee. She stated: “Taxpayers have lost billions as a result of this appalling deal.”

The same government statement claimed the deal offered zero protection “against the private sector making excessive gains at the taxpayer's expense".

The PAC also stated that although the deal included a discount from market rent rates, the MoD - and therefore the taxpayer - have been responsible for all maintenance on all properties, and revealed that if the MoD spent money improving a property for service families, in some circumstances this would incur greater rental costs under the terms of the deal.

Concerns were raised that if no deal was agreed – there would be around £5.9 billion in rent payments and capital charges, as well as additional properties currently valued at around £1.3bn being handed back to Annington, adding that UK taxpayers would end up being £8bn worse off as a result of the deal. Those figures were reached due to the £4.3bn spent in rent, the 18,000 properties handed back to Annington – with an estimated current market value of £5.2bn -, the £1.7bn income generated in 1996 for the taxpayer as part of the original deal, reaching an estimated total of £7.8bn worse off.

Having now agreed to buy back the military homes, Chief Secretary to the UK’s Treasury, Darren Jones said: “This is a landmark deal that will start saving the taxpayer money immediately, all while driving forward our mission to create growth across the country.

Pictured: The Ministry of Defence headquarters in London.

"Not only does it open the door to major development and improvements across the military housing estate, but most important of all, it will help us on our mission to build more houses and deliver our service personnel the homes they deserve.”

The UK's Defence Secretary, John Healey MP, said: “Our armed forces and their families make extraordinary sacrifices: theirs is the ultimate public service. It is shameful that in the lead up to Christmas, too many military families will be living with damp, mould and sub-standard homes – issues which have built up over the past decade.  

“We are determined to turn this around and renew the nation’s contract with those who serve. These important savings to the defence budget will help fix the deep-set problems we inherited. I thank the teams who have helped us reach this landmark deal at pace – another example of this government delivering for defence.   

“There is still a lot of work to do to deliver the homes our military families deserve, and these problems will not be fixed overnight. But this is a decisive break with the failed approach of the past and a major step forward on that journey.”

Pictured: John Healy MP stands next to Luton's Mayor, Councillor Tahir Malik (February, 2020).

In a statement on its website, Annington Ltd has welcomed the chance to challenge the buy-back.

"We welcome the Court of Appeal’s decision today to give us permission to appeal.

"This case raises significant questions for any organisation that enters a contract with the Government as to whether the Government can be trusted to keep its word.

"This case should worry any domestic or international investor who is considering the UK as a place for investment in infrastructure assets. We agree with the Judge pointing out that this is potentially a matter of wider importance.

"We believe the Government’s plan to forcefully repurchase Annington – 27 years after they sold it in a competitive international auction – is not just unlawful, but would waste huge sums of taxpayers’ money buying back homes in desperate need of repair, would damage the UK’s reputation as a safe place to invest, and would completely fail to address the pressing issue of the shameful condition many military families live in."

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