Guy Hands’ Annington Property Ltd. kicked off a court battle in an attempt to stop the UK government from unwinding the heavily-criticized privatization of a military estate of thousands of homes, now worth some £8 billion ($9.6 billion).
(Bloomberg) — Guy Hands’ Annington Property Ltd. kicked off a court battle in an attempt to stop the UK government from unwinding the heavily-criticized privatization of a military estate of thousands of homes, now worth some £8 billion ($9.6 billion).
“We are here because the government has decided to break its word,” Monica Carss-Frisk, a lawyer for Annington, said Monday at the start of a week-long London judicial review. The Ministry of Defence acted in an “underhand” way, keeping plans for the sale secret so as “not to trigger suspicions,” she said.
In 1996, the ministry sold a portfolio of residential housing for £1.7 billion to Annington, now backed by Hands’ Terra Firma Capital Partners. The government then rented the 55,000 homes on a 200-year lease. It now wants to buy some of those back in a forced sale.
Buying back the estate would create better value for money for taxpayers, the Ministry of Defence said in its legal filings. The ministry is pursuing a series of test cases before deciding whether to push for a sale of the whole estate.
Annington has taken to court to try to block the sale arguing that the government has no right to make the move without their consent. Ben Wallace, the UK’s Defence Secretary, is acting unlawfully by trying to take back ownership, Carss-Frisk said. Wallace is acting as if “he is entitled to behave as any private party would,” she said. “But he’s subject to different standards.”
The initial deal to sell the homes was “disastrous” the Parliament’s Public Accounts Committee said in 2019, given the ministry pays Annington millions of pounds a year in rent for the houses it leases. The National Audit Office estimated that the department is between £2.2 billion and £4.2 billion worse off since the 1996 deal, mostly due to soaring house prices.
Court documents from last year revealed the estate is worth £8 billion.
The UK pays around £178 million a year to Annington in rent to house military families as well as £140 million annually in upkeep, according to the National Audit Office.
Government’s lawyers led by James Eadie said in a filing that Annington is a savvy player in the property market who must’ve known of the potential of a forced divestment.
The Annington companies are “sophisticated commercial parties, who in fact had already identified” the risk of a forced sale, Eadie said.
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