Interesting to see that the Friday edition of the Financial Tines carried a front page story about the attempts of the current Westminster Conservative government to reverse the privatisation of military housing ( under John Major ) back in 1996. The MoD is exploring the possibility of using the “statutory leasehold enfranchisement rights” to by out the private interest - currently held by Terra Firma - Annington Homes ( which is owned by Guy Hands, the property billionaire ).
The former MoD housing, is on a 200 year lease, with the MoD paying some £183 million a year plus paying upkeep on the 38,000 remaining homes. The National Audit Office ( reported in 2018 ) that the original deal had lost the tax payer something like £4.2 billion pounds when the massive difference in the value of property was factored in.
The original deal was concluded when Michael Portilo, was Minister of Defence. The MoD understandably has a great desire to avoid getting stung with costs on the remaining 174 years of the lease, and are using the property laws, with a test case, to see if it is possible to take back ownership of the property portfolio.
Back in March 2010, I noted that it was worth noting that 57,600 homes ( in 1996 ) from the Ministry of Defence (MoD) were sold to City Financiers and they then rented them back to troops for a profit. The terms of the deal, made in 1996 meant that the MoD remained responsible for the properties' upkeep and claimed that the extra cash from the deal would provide badly needed funds to help refurbish them. However, it has since emerged that the Westminster Government diverted most of the money elsewhere.
The deal resulted in the payment of a tidy £1.67 billion to the Treasury for the homes, a profit share of £156m on the sale of surplus properties, yet many are dilapidated and unfit to live in. Back in March 2010 it was revealed that the MoD had spent as little as £4.4m a year on maintenance and refurbishment. The Sunday Times revealed details of just how little the government spent on the properties reporting that General Sir David Richards, the head of the army, was concerned that many troops felt undervalued because of cuts to housing and shortages in other areas.
By the mid-1990s, military housing around the country was in dire need of tens of millions of pounds worth of repairs. John Major's Conservative administration agreed to sell off the Military housing stock to the highest bidder, partly to raise funds for a refurbishment programme.
The original deal was put together in November 1996 with the government being paid for the homes, which would then be rented to troops and their families at below market rates. Surplus properties would be sold off with a percentage of the profits going to the Treasury. The consortium that acquired the military housing stock made more than £479 million in profits from its investment vehicle (Annington Homes) and became one of the UK's largest owners of private residential property.
Now this was all fine in theory, as the soldiers and their families should have benefited from the deal with hundreds of millions of pounds pouring into the Treasury. However, the Sunday Times revealed that New Labour ministers ensured that only a fraction of that sums raised be spent on the housing stock that had generated the windfall.
Annual expenditure revealed in a parliamentary answer) on maintenance and upgrade was revealed to have ranged from £4.4 million to £13.9 million between 2003 and 2008. New Labour Ministers insisted that they would produce extra funds to help improve the quality of the homes and have pointed out that more than £27 million was spent in the last financial year (2099) but oddly enough that never happened under New Labour, the Conservative - Liberal Democrat coalition government or successive wholly Conservative governments.
So what we have now as a result of decisions made by the previous Conservative Government and by successive New Labour Governments is army families living in substandard military accommodation some of whose loved ones are serving overseas - so much for the military covenant. The poor maintenance record predated privatisation of the military housing stock well prior to 1996.
The Conservative Government at the time washed its hands of a long standing problem, by selling off the military housing stock to the highest bidder in what can best be described a questionable deal which shifted responsibility onto someone else so that ministers who could not be held accountable and subsequent New Labour Governments failed miserably, to ensure that repair and maintenance was being carried out.
A bad situation was then made worse as successive New Labour government's failed to carry out basic repair and maintenance, they slashed the defence budget from which money for the maintenance of MOD property is provided. One wonders on what the £1.67 billion received was spent on and whether the then Chancellor Gordon Brown was ever aware of what was going on or even cared?
Successive Conservative and New labour Governments treated our servicemen and their families with contempt, no wonder some people believe that it no longer matters which of the two larger party's is in government, as our servicemen will be treated with contempt, forced to buy their own kit and treated to a total lack of interest and yet time and time again it is our servicemen that will be called on to step in to pull the fat from the fire whether it is dealing with the consequences of strikes, disasters, the saving lives at sea, foot and mouth and almost everything else as an when necessary.
Fast forward to 2022 and it looks like if the test cases are successfully that an independent tribunal will determine the cost of taking the properties back into public ownership, using market values. The current property owner, who have been raking it in, has understandably kicked off big time as a serious little earner could vanish if the former military housing stock end up being brought back under rate control, of the state from the private sector.
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