Guy Hands’ property company Annington has agreed to sell a portfolio of 36,347 military homes to the Ministry of Defence (MoD) for almost £6bn, concluding a protracted dispute between the billionaire investor and the UK government.
The deal sees Annington, which was acquired by Hands’ private equity group Terra Firma in 2012, hand back its 999-year lease on the so-called Married Quarters Estate in exchange for £5.99bn. The amount is nearly double the £3.2bn Terra Firma paid for Annington, but less than the £8bn valuation placed on the homes last year.
The sale brings an end to ongoing court proceedings and legal wrangles sparked by government plans to use property legislation to reclaim the homes and reduce costs. Annington had sought relief in both the High Court and the European Court of Human Rights over concerns about financial losses linked to the reforms.
Originally sold by the Conservative government in 1996 when Michael Portillo was defence secretary, Annington’s acquisition of 57,400 MoD homes for £1.7bn made the company one of the largest residential property owners in England and Wales. Under the terms of the original deal, the MoD continued to lease the properties at a discount, bearing full responsibility for upkeep and renovation.
Over time, Annington refurbished nearly 20,000 homes and returned most to the UK market, with the majority sold as affordable properties to first-time buyers. However, the government has long faced criticism over the arrangements, including significant annual rent bills and mounting maintenance concerns.
The MoD says that bringing the homes back under public ownership will save about £230m a year and enable it to address long-standing problems with substandard accommodation, highlighted in a recent Commons defence committee report. The document indicated that two-thirds of family homes, many of which fall under the Annington portfolio, required extensive refurbishment or rebuilding.
John Healey, the defence secretary, acknowledged that “there is still a lot of work to do to deliver the homes our military families deserve,” but hailed the purchase as “a decisive break” from past arrangements. Ian Rylatt, chief executive of Annington, said the sale marks a new chapter and allows the parties to move forward without further legal distractions.
As part of the agreement, the MoD will transfer 159 homes worth £55m to Annington within the next year. The £5.99bn purchase is set to complete on 9 January, with the proceeds earmarked to pay down Annington’s debt and partly distribute to shareholders, including UK pension and sovereign wealth funds. The firm, which retains a portfolio of 1,600 rental properties, plans to reinvest in the UK property market following the transaction.
