Military homes row heads to court
Guy Hands files legal claim against MoD to block renationalisation of £7.6bn housing portfolio
By Helen Cahill – Daily Telegraph – Tuesday 15 March 2022
GUY HANDS’ housing firm has launched legal proceedings against the Government to block the renationalisation of its portfolio of thousands of military homes.
Hands’ company Annington Homes has begun legal action in two courts after talks with the Ministry of Defence (MoD) over the renationalisation broke down. Annington offered to contribute £105m to maintain the homes but was rebuffed by the MoD.
Anningtorn has now launched a judicial review as well as a High Court claim challenging the ‘MoD’s plans. Defence chiefs are trying to use leasehold rights to reclaim homes that were first sold off by John Major’s administration in 1996.
Hands brokered the privatisation deal while he was head of the Principal Financial Group at Nomura. He later purchased the properties through his private equity firm Terra Firma. The portfolio is now valued at £7.6bn.
The MoD sold off 57,400 homes for £1.7bn and then rented them back on a 200-year lease.
The Government has since been criticised for failing to properly value the homes in the original auction. The National Audit Office has complained officials were too cautious with their assumptions for house prices, and missed out on vast capital growth in the portfolio. Its report found taxpayers have lost as much as £4.2bn.
The Government is also on the hook for hundreds of millions each year in rent and maintenance payments on the properties. Lord Admiral West, the former first sea lord, has described the deal as a “dream money-making scheme for the private sector”.
Annington said the Government could still avert a lengthy legal dispute if it takes up the company’s offer to contribute £105m towards maintenance. The company has warned legal proceedings could take up to five years.
A spokesman for Annington Homes said: “We can confirm that Annington has begun legal proceedings against the UK Government.
”We continue to be open to discuss with the Government to find a solution that avoids a long and expensive legal dispute.”
Hands was hoping to sell the portfolio in a private auction before hearing of the MOD’s attempt to reclaim the properties. Reports suggested he could have made more than £1.5bn from the sale.
Annington has argued that the scheme is not appropriate for use on a large number of homes and that making thousands of applications will block up the court system. But the MoD is confident it would be able to use test cases to establish valuations for a wider group of properties.
Mr Hands has embarked upon lengthy legal battles in the past. His ill-fated takeover of music group EMI sparked a legal dispute with Citigroup that lasted seven years. Citi lent Terra Firma £2.5bn to fund the deal.
Mr Hands later chased the bank through the courts, both in New York and London over allegations of fraud but he abandoned the £1.5bn case in 2016.
The MoD declined to comment.