MoD has two weeks to avoid legal action, warns army homes firm Annington

Bosses at Annington Homes have told the Ministry of Defence they have “two weeks” to avoid legal action as it seeks to unwind one of the Government’s biggest ever privatisation deals.

Annington, a portfolio of 57,400 military properties, was sold off by the MoD in 1996 in a move valued at £1.7 billion at the time.

However, the company said the MoD and UK Government Investments, the state’s investing arm, are seeking to forcibly buy back the business, where it still has leasehold and maintenance agreements on around 38,000 homes.

Last week, defence procurement minister Jeremy Quin said the government would explore whether leasehold enfranchisement deals, designed for individual tenants to buy properties off their landlords, could be used to buy back the homes.

In a letter to Defence Secretary Ben Wallace, Annington chair Baroness Helen Liddell said she was “shocked” by the Government’s approach.

She accused the MoD of serving the company enfranchise notices on two houses in Cranwell, Lincolnshire, and then forcing the sale of both properties to newly formed company Defence Infrastructure Holdings for £1.

Annington said the Government is “seeking without notice to tear up a long-standing agreement, which sends a dreadful signal to businesses which rely upon the good word and good faith of Government”.

The company, which is now partly owned by Guy Hands-led private equity firm Terra Firma, said it would come to the table to discuss selling the business to the Government, considering a valuation by real estate firm CBRE of almost £8 billion.

In the letter, the Annington chair also criticised the state of the properties – which are maintained by the Government as part of the initial sale agreement – as “unacceptable” for service personnel.

Baroness Liddell also criticised the Government for spending £36.6 million in rent per year on around 7,230 vacant properties in the estate.

“It makes no sense at all for the MoD either to spend these vast sums renting homes with no occupants, or to deprive would-be homeowners/buyers of a proper home of their own,” she wrote.

“It also makes no sense that DIO (the Defence Infrastructure Organisation) is now taking steps to use enfranchisement legislation to buy these houses back at considerable public expense, when it has no need for them.”

On Wednesday, Annington added that it is offering a £105 million fund to improve and modernise service personnel homes.

It told the MoD that the cash made available for the fund will instead need to be used for legal costs if an agreement is not found in the next two weeks and a litigation process begins.