Deal to sell estate "turned out to be disastrous for taxpayers"
In 1996, the Ministry of Defence sold most of its married quarters estate (now referred to as service family estate) to Annington Property Limited and agreed to rent it back for up to 200 years.
The deal has turned out to be disastrous for taxpayers, offering no protection against the private sector making excessive gains at the taxpayer’s expense.
Worse could follow because the rent, which has been subject to a 58% downwards adjustment to date, is to be reviewed from 2021. Depending on the outcome of negotiations, the Department’s costs could increase significantly at a time when the defence budget is already stretched.
The Department and its Defence Infrastructure Organisation, which is again being reorganised, do not yet appear to be well prepared in terms of having the necessary staff and information.
Continuing low levels of satisfaction with standard of accommodation
The uncertainty over the outcome of these negotiations is part of a wider lack of clarity about the future form of service housing support that will be available.
This is fuelling continuing low levels of satisfaction with the overall standard of service family accommodation, which is concerning at a time when the Armed Forces are struggling to retain the personnel it needs.
It is also scandalous that, over the life of the contract with Annington and at a time of a national housing shortage, the Department has failed to reduce the number of empty properties it holds; the number currently stands at over 10,000, roughly the same as 21 years ago.
Comment from Committee Chair, Meg Hillier MP:
"Taxpayers have lost billions as a result of this appalling deal and there could be worse to come if the MoD fares poorly in rent negotiations.
The uncertainty over those negotiations is a further slap in the face for those Forces families who, for far too long, have endured poor standards of subsidised accommodation.
It is not at all clear what impact different outcomes will have on the level of housing support available to service families in future, nor how the negotiations fit into the MoD’s wider estate strategy.
At this critical time it is difficult to see how restructuring the Defence Infrastructure Organisation will do anything other than undermine the MoD’s efforts to prepare.
The MoD needs to move quickly to shore up its negotiating position and bring some overdue coherence to its estate strategy.
A priority must be to set out its plans for reducing the number of empty properties it holds to a more acceptable level."
Image: Crown copyright