- Landmark deal struck to bring military housing estate back into public hands.
- Major deal unlocks new-build housing projects for military families plus essential refurbishments.
- End to huge annual rental bill to save around £230 million per year.
Billions of pounds will be saved by the deal over the next decade, delivering savings for taxpayers and enabling additional investment into homes for military families. The landmark move reverses a sale undertaken by the Government in 1996.
The Defence Secretary describes today’s announcement as a “decisive break” with the failed approach of the past, which will enable the first steps to be taken to fix the long-term decline in housing for military families and deliver homes fit for heroes. He will also commit to using the deal to help achieve the Government’s milestones on kickstarting economic growth and boosting housebuilding across the country.
Today’s deal will bring to an end to an arrangement which has seen the taxpayer spend billions of pounds on rental payments for military housing while still being liable for rising maintenance costs and handing back billions of pounds worth of military properties.
Under the agreement, the Ministry of Defence (MOD) will buy back 36,347 houses, making major redevelopment and improvements possible. The deal is part of the Government’s drive to boost military morale, tackle recruitment and retention challenges and renew the nation’s contract with those who serve.
The MOD, supported by UK Government Investments, and Annington have formally agreed that the MOD will reacquire the service family estate sold in 1996, which is now valued at £10.1 billion when not subject to leases, and is being purchased for £5,994,500,000, representing excellent value for money.
The new deal will see the immediate saving of more than £600,000 of taxpayers’ money each day, with the current annual bill of £230 million in rent being eliminated. These savings to the defence budget will help to fix “deep-set problems” in military housing, and support the development of a high-quality new homes for military families.
The announcement comes as the Government kickstarts work on a new military housing strategy, to be published next year. Key principles of the strategy will include: a generational renewal of Armed Forces accommodation; new opportunities for forces homeownership; and better use of MOD land to support the delivery of affordable homes for families across Britain.
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.
This will support the Government’s Plan for Change, which is built on the strong foundation of national security. It also comes alongside the Prime Minister’s Homes for Heroes pledge to exempt veterans from rules requiring a connection to a local area before accessing social housing.
Defence Secretary, John Healey MP, said:
This deal shows our government is determined to deliver homes fit for our heroes. This is a once in a generation opportunity, not only to fix the dire state of military housing but to help drive forward our economic growth mission, creating jobs and boosting British housebuilding.
Our armed forces and their families make extraordinary sacrifices: theirs is the ultimate public service. It is shameful that in the lead up to Christmas, too many military families will be living with damp, mould and sub-standard homes – issues which have built up over the past decade.
We are determined to turn this around and renew the nation’s contract with those who serve. These important savings to the defence budget will help fix the deep-set problems we inherited. I thank the teams who have helped us reach this landmark deal at pace – another example of this government delivering for defence.
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.
Chief Secretary to the Treasury, Darren Jones said:
This is a landmark deal that will start saving the taxpayer money immediately, all while driving forward our mission to create growth across the country.
Not only does it open the door to major development and improvements across the military housing estate, but most important of all, it will help us on our mission to build more houses and deliver our service personnel the homes they deserve.
The original agreement did not strike an appropriate balance of risk and reward, and it is estimated the taxpayer is nearly £8 billion worse off as a result. Money which should have been better spent on maintaining and improving our service family homes.
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 net financial debt, is confined to £1.7 billion.
The 1996 sale saw 55,000 houses sold for an average of just £27,000 each property. In buying these houses back, the government will control properties worth almost ten times that average value and will no longer be paying £230 million annually in rent.
Other areas of the deal that have cost taxpayers money or prevented improvements to the estate include:
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Annually handing back hundreds of empty properties to Annington, totalling more than 18,000 properties since 1996 – worth an estimated £5.2 billion by today’s valuations.
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Although the deal included a discount from market rent rates, the MOD – and therefore the taxpayer – have been responsible for all maintenance on all properties.
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If the MOD spent money improving a property for service families, in some circumstances this could incur greater rental costs under the terms of the deal.
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Despite most of the properties having been built in the 1950s and 1960s, the deal has prevented the MOD from being able to demolish properties or build additional houses for Service Families.
Chief of the Defence Staff, Admiral Sir Tony Radakin said:
Housing provision is a constant part of life for Service Personnel and their families, who support them closely throughout their military careers. We understand the importance placed on this for people’s morale and decisions on whether to continue in the Armed Forces long-term.
This deal is a crucial step in being able to deliver meaningful change for those who serve – an opportunity to regain control of the estate and move forward with substantial redevelopment and refurbishment. This work will provide military families the higher-quality houses they fully deserve. It is very significant and very welcome.
Following today’s deal, the MOD can start work on substantive redevelopment and improvements. The agreement frees up our ability to build on the Service Family Accommodation estate with a more modern estate, helping reduce maintenance costs and, as part of work facilitated by the deal, programmes to build new houses are being accelerated.
Planning applications will be submitted in the coming days for 265 new houses and apartments at RAF Brize Norton, and further plans will be submitted in the Spring for around 300 new houses at Catterick Garrison.
The potential for improvements to the estate can already be seen where family housing is being provided outside of the 1996 deal. At Imjin Barracks in Gloucestershire 176 modern homes are being built, which include low-carbon heating systems and solar panels, reducing energy costs for military families and improving sustainability.
The landmark deal to repurchase the estate from Annington follows the MOD’s comprehensive success in the High Court last year. The agreement brings the properties back to public ownership and delivering long term value for money for current and future taxpayers.
Since July, the Government has slashed recruitment red tape to make the process more straightforward for those wanting to join the military, announced the largest Armed Forces pay increase for 22 years and recently the Armed Forces Commissioner Bill passed its Second Reading in the House of Commons.
Background
The estimated overall budgetary impact of the agreement over the next 10 years – if no deal had been agreed – would be around £5.9 billion in rent payments and capital charges, as well as additional properties currently valued at around £1.3 billion being handed back to Annington.
Taxpayers being £8 billion worse off as a result of the deal:
- £4.3 billion spent in rent.
- 18,000 properties handed back to Annington – with an estimated current market value of £5.2 billion.
- £1.7 billion income generated in 1996 for the taxpayer as part of the original deal.
- Total – £7.8 billion worse off.
The full High Court judgement on right to enfranchisement can be found here: