Stay informed with free updates
Simply sign up to the Property sector myFT Digest — delivered directly to your inbox.
The UK government will pay property group Annington nearly £6bn to buy back 36,000 properties in the Ministry of Defence’s housing estate, ending a legal battle over their future.
The so-called Married Quarters Estate was privatised in the 1990s on a long-term lease to Annington. But the government has recently sought to take back ownership of the assets using the property law of enfranchisement.
The move triggered a dispute with Annington, the property company owned by billionaire Guy Hands’ private equity group Terra Firma, which mounted a legal challenge to the government’s attempt to unwind the deal last year.
Defence secretary John Healey said on Tuesday that the deal to bring the houses back into public hands was a “decisive break with the failed approach of the past” and would allow the government to improve conditions for service members and their families.
Under the controversial £1.7bn agreement struck in 1996, Annington originally took a 999-year lease over about 55,000 properties. The MoD then leased back the homes over a shorter term at a discount, and agreed to shoulder the costs of refurbishment and maintenance.
Taxpayers have ended up £8bn worse off from the nearly 30-year privatisation, enacted in the final years of John Major’s Conservative government, the MoD said. It said the buyback would save £230mn in rent every year.
The price paid to end Annington’s long lease to the estate represents a discount of 13.5 per cent to the fair value of the properties in March 2024, according to the property company’s annual report.
Annington chief executive Ian Rylatt said it had agreed the deal to end a “costly and distracting legal dispute”. It has also on Tuesday made an offer to bondholders to reduce its £3.7bn debt pile by redeeming some of the bonds.
The government said the deal would “bring to an end to an arrangement which has seen the taxpayer spend billions of pounds on rental payments for military housing while still being liable for rising maintenance costs”.
The property group has also exercised its rights under that deal to sell off thousands of units no longer needed by the military over the years.
The MoD in late 2022 launched a bid to regain control of some of the properties under enfranchisement rights, that allow leaseholders to take back properties at a value agreed by a court, which Annington resisted, leading to a protracted court battle.
The property group separately took the Conservative government to court last year to challenge its new leasehold reform legislation.
The company said Tuesday’s deal would bring an “end to all ongoing litigation”.
