A judicial review against the Ministry of Defence (MoD), launched by Annington Homes, a property company controlled by billionaire Guy Hands, reached London's High Court on Monday 13 February. The claim aims to block the reversal of a privatisation deal involving over 57,000 military homes, now estimated to be worth £8.15bn
The privatisation deal concluded in 1996 and involved a sale and leaseback agreement. The MoD granted a 999-year lease of 57,434 homes for military service families to Annington and immediately leased the homes back on 200 year underleases. The sale was worth just £1.7bn at the time and, with the value of British housing having soared since, the sell-off has been regarded by many as a costly mistake and disastrous for taxpayers. In 2018, MPs commented that the government had missed out on as much as £4.2bn in asset price increases and would have been better off if it had kept the properties.
At the end of 2021, the MoD informed Annington that, using its rights as the properties' freeholder, it wished to reacquire and take back control of a small number of properties. These rights are contained in the Leasehold Reform Act 1967 which allow leaseholders to buy the freehold of their residential property at a price agreed by the Court. If this 'test' case proves successful, the MoD will consider buying back the entire property portfolio. An MoD spokesman has stated that exploring these statutory leasehold rights is "part of our ongoing work to ensure value for taxpayers' money".
Annington has argued that the MoD's attempt to take back control of these properties is unlawful as it had not "satisfied the conditions for compulsory acquisition". They stated further that "no public interest which is consistent with the statutory scheme has been identified by the MoD" and that the 1967 Act "was clearly not intended to be used by a public authority".
The outcome of the case will have significant ramifications for both parties. The stage is set for what The Lawyer has described as "one of the most prominent judicial reviews of 2023".
In its filings contesting the case, the MoD claimed that Annington’s legal action is a “transparent attempt by the claimants to use the judicial review procedure to increase their bargaining power over the MoD.”