Legal battle looms as Ministry of Defence aims to forcibly buy back 3,000 military homes in Yorkshire

A company which owns more than 3,000 military homes in Yorkshire is attempting to head off Government plans to forcibly buy back the properties.

Annington Homes has a portfolio of 38,000 military properties including 3,044 in Yorkshire. The Government originally sold off 55,000 properties in 1996 for £1.7bn but a number of the leases have been returned since then.

The company said the Ministry of Defence and UK Government Investments, the state’s investing arm, are now seeking to forcibly buy back the remaining properties, where it has still has responsibility for leasehold and maintenance agreements.

Annington said it would be prepared to establish a £105m fund to improve and modernise the homes - despite the maintenance of the properties being the responsibility of the Government.

A fire damaged house at RAF Linton-On-Ouse currently under the ownership of Annington Homes. The company says it will commit £105m to improving such properties if the MoD drops attempts to forcibly repurchase the properties.

It has 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. But the MoD said today that its approach to the issue Woffers a significant opportunity to deliver value for money for the taxpayer".

Annington said if the fund can go ahead, improvements would include upgraded heating and insulation, refreshed fixtures and fittings in kitchens and bathrooms, and improvements to the external and internal structure of buildings to reduce and eliminate chronic and widespread damp. It is intended that the money will be focused on homes with the most acute need of repair.

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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 - initially through a test case purchase of two properties.

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.”

Department defends its approach

An MOD spokesperson said: “We believe our approach offers a significant opportunity to deliver value for money for the taxpayer and increase our flexibility in meeting the need of service families and wider government objectives.

“We will of course study whatever Annington puts to us.”

Existing ownership arrangements on the military properties have cost taxpayers billions, Jeremy Quin said in his Parliamentary statement.

He highlighted that in 2018 the National Audit Office had concluded taxpayers were between £2.2bn and £4.2bn worse off as a result of the 1996 sale and leaseback arrangements. He said the review of arrangements was part of the Government’s “obligations to secure value for money”.

But Mr Quin's statement also noted the plan was set to be challenged by Annington.

"Annington, through its lawyers, has notified the MOD that it is considering the impact of the claim and has put the MOD on notice of a potential dispute," he said.

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