Summary

In 1996 the Ministry of Defence (MoD) sold much of its service family accommodation (SFA) estate to Annington Homes for a price of £1.7 billion. The MoD then leased the properties back, paying £230 million a year by 2024, while retaining maintenance and management responsibilities for the properties. The MoD’s stated aims of the sale were to more effectively dispose of properties it no longer needed and to improve the standard and management of accommodation through greater involvement of the private sector. The MoD’s repurchase of its SFA estate represents value for money when compared with the option of continuing its arrangements with Annington to lease back the estate. The MoD did well to apply commercial leverage and, ultimately, to secure a favourable outcome to its negotiations. However, this needs to be situated within the wider context of the 1996 sale of the estate. The repurchase has stemmed the flow of further losses but we now estimate that by the time of the December 2024 repurchase of the estate, the MoD was £14.5 billion worse off than it would have been had it not entered into the deal with Annington. Ultimately, value for money will depend on the MoD making the most of the opportunity that the repurchase brings about and delivering on the ambitions set out in the Defence Housing Strategy. In the meantime, the MoD’s deal with Annington should remain a cautionary tale about the risks to long-term value for money that are inherent in sale and leaseback transactions.