Guy Hands’ property firm Annington has agreed to sell a portfolio of 36,347 military homes to the Ministry of Defense for nearly £6 billion, ending a long-running 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, return its 999-year lease on the so-called Married Quarters Estate for £5.99bn. This is double the £3.2bn that Terra Firma paid for Annington, but is less than the £8bn valuation set for the homes last year.
The sale brings an end to ongoing court proceedings and legal wrangling sparked by the government’s plans to use property legislation to repossess homes and reduce costs. Annington has sought damages from the High Court and the European Court of Human Rights over concerns about financial losses associated with the reforms.
Originally sold by the Conservative government in 1996 when Michael Portillo was Defense Secretary, Annington’s acquisition of 57,400 MoD homes for £1.7bn made the company one of the largest owners of residential property in England and Wales. Under the terms of the original deal, the Ministry of Defense continued to lease the properties at a discounted rate, taking full responsibility for maintenance and refurbishment.
Over time, Annington has renovated nearly 20,000 homes and returned most of them to the UK market, with most sold as affordable properties to first-time buyers. However, the government has long faced criticism over the arrangements, including large annual rent bills and rising maintenance concerns.
The MoD says returning the homes to public ownership will save around £230 million a year and enable it to tackle long-standing problems of substandard housing, which were highlighted in a recent House of Commons Defense Committee report. The document noted that two-thirds of family homes, many of which fall within Annington’s portfolio, require extensive renovation or rebuilding.
John Healey, the Defense 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 previous arrangements. Ian Raylatt, chief executive of Annington, said the sale marked a new chapter and allowed the parties to move forward without further legal distractions.
As part of the agreement, the Ministry of Defense will move 159 homes worth £55 million to Annington over the next year. The £5.99 billion purchase is due to be completed on January 9, with the proceeds earmarked for repaying Annington’s debts and distributed in part to shareholders, including the UK’s pension and sovereign wealth funds. The company, which maintains a portfolio of 1,600 rental properties, plans to reinvest in the UK property market following the deal.
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