Government buys back military homes after 'disastrous' privatisation deal cost taxpayer billions

The government has announced it will buy back 36,347 military homes from property company Annington in a £6bn deal to save money on rent and maintenance costs following a “disastrous” privatisation sell off.

The Ministry of Defence (MoD) sold off the service family estate in 1996 for £1.7bn, but last week a report from the Defence Committee found the housing stock was in a “shocking” state with two-thirds of homes needing “extensive refurbishment or rebuilding”.

The MoD was still responsible for paying discounted rents to Annington as well as maintenance costs on the properties. 

The deal has previously been described as “disastrous” by the Public Accounts Committee while the National Audit Office estimated the first 21 years of the contract cost the MoD between £2.2bn and £4.2bn more than if they’d kept the properties. The department claimed overall the deal cost the taxpayer an estimated £8bn.

The MoD said the £6bn purchase, announced on Tuesday (17 December), would bring an “immediate saving of more than more than £600,000 of taxpayers’ money each day, with the current annual bill of £230m in rent being eliminated”.

The government added that the savings to the defence budget will help to fix the “deep-set problems” in military housing and support the development of new military homes.

Defence secretary John Healey explained that the deal shows the 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,” he said. 

“It is shameful that in the lead up to Christmas, too many military families will be living with damp, mould and substandard homes – issues which have built up over the past decade.”

Healey explained that the problems with military housing “will not be fixed overnight”, but the deal is a “major step forward” and a “decisive break with the failed approach of the past”. 

According to The Guardian, the military homes were purchased by the MOD from a property company linked to billionaire Guy Hands for almost £6bn. The government confirmed that the houses, valued at “£10.1 billion when not subject to leases”, are being purchased for £5,994,500,000.

The UK government sold 55,000 military houses for an average of £27,000 per property in 1996, generating £1.7bn at the time.

The deal was announced just days after a defence committee report found that military housing is in a “shocking” state, with two-thirds of Service Family Accommodation (SFA) needing “extensive refurbishment or rebuilding”. 

Along with the report, defence minister Alastair Carns revealed that a total of 3,780 incidents of damp and mould were reported in Service Family Accommodation in 2022, and a further 5,225 incidents of damp and mould reported in 2023. 

In addition, between 2018 and 2023, military families lodged almost 53,000 complaints about their housing, according to the Telegraph.

• What to do about mould and damp in a rented property
• This Remembrance Day, let us remember the LGBTQ+ veterans dismissed and imprisoned

Stephen Morgan, MP for Portsmouth South, said: “It shames our nation that in the lead up to Christmas, too many military families are living in substandard military housing.

“For the families of those who put themselves in harm’s way to keep our country safe, that is unacceptable.

“I have long campaigned for change and now it is coming. This announcement is a major step in ensuring homes fit for our heroes.”

Do you have a story to tell or opinions to share about this? Get in touch and tell us more. This Christmas, you can make a lasting change on a vendor’s life. Buy a magazine from your local vendor in the street every week. If you can’t reach them, buy a Vendor Support Kit.