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3 weeks ago
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A property company linked to Guy Hands has agreed to sell 36,000 military homes to the UK’s Ministry of Defence for almost £6bn, signalling an end to a long-running battle between the billionaire and the government.
Annington will hand over its 999-year lease on the Married Quarters Estate to the MoD and receive £5.99bn in return – almost twice as much as Hands’s company Terra Firma paid for Annington more than a decade ago, but less than the £8bn the homes were valued at last year.
The sale ends court proceedings brought by Annington over planned housing reforms. In September, the company took a legal fight with the UK government to the European court of human rights over fears it could lose significant sums as a result of the new Leasehold and Freehold Reform Act. It also launched a challenge in the high court on the same grounds.
The UK government sold 55,000 military homes to Annington in 1996, in a deal worth nearly £1.7bn. In 2012, Terra Firma bought Annington from the Japanese investment bank Nomura Holdings for £3.2bn.
Hands, one of Britain’s highest-profile private equity investors, launched Terra Firma in 2002 and has since made more than £15bn in investments, including the record company EMI, Tilia Homes and Welcome Hotels.
At the moment, the MoD has a contractual lease agreement with Annington and pays rents for the properties under the long-term arrangement. In January 2022, the MoD said it was hoping to take back full ownership of the homes through enfranchisement rules under existing leasehold legislation.
The MoD said the deal brings military housing back into public hands and ends a “huge annual rental bill” to save about £230m a year.
John Healey, the defence secretary, said: “There is still a lot of work to do to deliver the homes our military families deserve, and these problems will not be fixed overnight. But this is a decisive break with the failed approach of the past and a major step forward on that journey.”
Contracts were exchanged in relation to the sale on Monday and the deal is expected to close on 9 January. The sale proceeds will be used to pay down Annington’s debt, with another portion distributed to shareholders, including UK pension funds and sovereign wealth funds. The firm also plans to reinvest in the UK property market.
Ian Rylatt, the Annington chief executive, said the deal represents a new chapter for the estate and “ends a costly and distracting legal dispute, allowing everyone to move forward”.
“This deal also provides Annington with greater operational freedom and flexibility, and we will look to build on our strong technical experience of managing a large UK real estate portfolio to explore new opportunities in the market.
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“We will continue to focus on increasing the amount of affordable housing available in the UK property market and furthering our commitment to supporting the nation’s housing needs.”
He said Annington had refurbished and delivered nearly 20,000 homes back into the UK market, with the vast majority sold as affordable homes to first-time buyers. The private equity group has 1,600 other rental properties.
The MoD will transfer 159 homes worth £55m to Annington within 12 months as part of a pre-existing agreement.
