Developments in Military Housing

John Healey Excerpts

Tuesday 17th December 2024 Written Statements

[The Secretary of State for Defence (John Healey)]

I am pleased to confirm that today, the Ministry of Defence and Annington Property Ltd have formally agreed that the MOD will reacquire the 36,000 service family estate homes sold to Annington in 1996.

This agreement reverses one of the most notorious privatisations of the 1990s, with the balance of risk and reward skewed heavily against the public sector. The billions of pounds spent by the MOD on renting back these properties since 1996 could have been better spent on maintaining, improving or rebuilding service family homes.

Estimates suggest the 1996 deal has left the British taxpayer nearly £8 billion worse off—money that could have been used to deliver homes fit for our heroes. In addition to the billions of pounds paid in rent, billions of pounds-worth of empty properties have also been handed over to Annington Ltd.

The new deal is a decisive break with the failed approach of the past, which will save the public purse £230 million a year in rental costs—more than £600,000 a day. These important savings to defence pave the way for a substantial improvement and construction programme to provide high-quality homes for armed forces families. The deep-set problems with military housing will not be fixed overnight, but this is a major step forward and a demonstration of our Government’s intent.

This deal forms part of our growth mission to secure jobs, economic prosperity and house-building across the UK, and our commitment to renew the nation’s contract with those who serve—boosting morale, retention and recruitment across the armed forces.

The opportunity for this landmark deal was presented following a High Court ruling in MOD’s favour. This established MOD’s legal rights to repurchase the houses from Annington, providing a once-in-a-generation opportunity to fix the long-term decline in military housing and deliver homes fit for heroes.

The deal also represents excellent value for money. We are buying the estate for £6 billion, yet the properties are valued at £10.1 billion by Annington when not subject to leases. However, eliminating the liabilities associated with the leases creates budgetary headroom to partially fund this purchase, meaning that the public expenditure impact of this measure, and the impact on public sector net debt, is confined to £1.7 billion.

By contrast, failing to take advantage of this opportunity would have meant rising rental and maintenance costs on properties that, in many cases, have reached the end of their useful lives.

The taxpayer would have faced a further £5.9 billion costs over the next 10 years through ever-increasing rents. Homes with a value of £1.3 billion would also have been returned to a private company.

Problems with the existing deal were recognised by the last Government, in particular by the right hon. Member for Horsham at the time, Jeremy Quin, who had oversight of the initial core legal challenges. This Government have accelerated this work in recent months across the Ministry of Defence, UK Government Investments and His Majesty’s Treasury. We pay tribute to all those who have worked tirelessly to complete this deal.

This announcement comes as the Government start work on a new military housing strategy, to be published next year. The first steps in the strategy will include the rapid development of an action plan to deliver on the “once in a generation” opportunities unlocked by today’s deal. This work will involve independent experts, forces families and cross-Government input.

The strategy will help to deliver a generational renewal of military housing, new opportunities for forces homeownership, and better use of MOD land to support the delivery of affordable homes for families across Britain.

Our armed forces make extraordinary sacrifices to keep our country safe. Theirs is the ultimate public service. By ensuring that our personnel and their families have the homes they deserve, this work will support the Government’s plan for change, which is built on the foundation of strong national security, and it will help achieve the Government’s milestones on kick-starting economic growth and boosting house-building across the country.

Today’s announcement demonstrates how our Government are delivering for defence. This is a major step forward towards delivering military housing fit for our heroes.

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