MoD seeks to buy back 38,000 homes leased from billionaire
The UK government wants to reverse a controversial privatisation deal by seeking to wrest ownership of 38,000 homes in the Ministry of Defence housing portfolio from the billionaire private equity boss Guy Hands.
The move is expected to lead to a legal battle between the MoD and Hands’ private equity firm Terra Firma over whether the government can take back full ownership of the homes.
In 1996, under the defence secretary Michael Portillo, the Conservative government sold 57,400 houses used by military service men and women and their families to Annington Homes for £1.7bn in a sale and leaseback deal. In one swoop, Annington became the biggest residential property owner in England and Wales. The MoD rented back the homes on a 200-year lease at a discount but also agreed to pay for their maintenance and refurbishment.
The value of the properties has ballooned under Annington’s ownership to many times their original purchase price, meaning the taxpayer has missed out on any profits from the property boom. They were valued by Annington at £7.6bn last year, while their vacant possession value is estimated at £10bn. The MoD is paying about £180m a year in rent plus £140m in repairs and upgrades.
Terra Firma, which purchased Annington from Nomura Holdings for £3.2bn in 2012, said it would challenge the MoD’s move, and that it expected to win in what it predicted would be a “very long and very expensive” court case.
At the time of the deal the MoD hoped to free up cash for renovation as the homes were falling apart.
However, the National Audit Office concluded in a 2018 review that taxpayers were between £2.2bn and £4.2bn worse off as a result of the arrangement. The NAO said the MoD had “lost out on billions of pounds’ worth of
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