The Ministry of Defence (MOD) has announced a landmark deal to buy back 36,347 military homes in an effort to improve accommodation for forces families and save taxpayers billions of pounds.
The agreement reverses a controversial 1996 sale of military housing and will result in annual savings of £230 million on rent payments.
The deal, valued at £5.99 billion, represents significant savings compared to the current market value of the properties, which stands at £10.1 billion. According to the MOD, the arrangement will not only end spiralling maintenance costs but also enable large-scale redevelopment, with plans to build modern, energy-efficient homes across the military estate.
Defence Secretary John Healey described the move as a “decisive break with the failed approach of the past.” He continued: “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.”
The original sale in 1996 saw 55,000 homes sold for an average of £27,000 per property, a deal that has since cost taxpayers nearly £8 billion. As part of that agreement, the MOD continued to pay rent while being responsible for maintenance costs. Between rent payments and properties handed back over the years, the MOD estimates it was nearly £7.8 billion worse off.
Chief of the Defence Staff Admiral Sir Tony Radakin welcomed the deal, stating: “Housing provision is a constant part of life for Service Personnel and their families… This deal is a crucial step in being able to deliver meaningful change for those who serve.”
Key Savings and Improvements
The MOD anticipates immediate savings of £600,000 per day, with the £230 million annual rent bill eliminated. The agreement frees up resources to focus on:
- Major redevelopment and refurbishment of outdated military housing.
- Building new homes for forces families, boosting MOD housing stock.
- Modernising the estate with energy-efficient systems, reducing costs for families.
To demonstrate progress, the MOD has fast-tracked plans for 265 new homes at RAF Brize Norton and 300 homes at Catterick Garrison, with planning applications expected in the coming months.
The state of military housing has been a growing concern, particularly in recent years, with reports of damp, mould, and other substandard living conditions. The MOD highlighted that the 1996 deal prevented vital improvements, stating that any significant upgrades could increase rental costs under the terms of the contract.
Healey acknowledged these challenges: “It is shameful that in the lead-up to Christmas, too many military families will be living with damp, mould and sub-standard homes – issues which have built up over the past decade.”
Good.
£230m saved in rent each year, but the MOD has to spend 26 times that much (£5.99 billion) buying the homes back. Where’s that money coming from?
Defence budget of course!
True. Which means there is £6bn less in year for buying kit, doing expensive training or spending on the troops (better pay and pensions etc). That will have a huge impact.
Hi Graham trust you are well and hearty. I have been mulling on something and as you are pretty clued up on the Army side of things you may be able to answer it. Other than 18 2nd hand SPGs from Sweden can you think of any major item of New kit that has been actually contractually ordered for the Army this decade ?
I’ve been racking my brains and other than 2 2nd hand civilian OSV’s for the Navy I can’t think of anything for the other services either.
All the equipment budget is going on paying for stuff already on order and if I’m right that is just scarey !
Well Labour did make this a priority even before they took power.
It is a good move.
Hi M8 Trust you are Ok, would you be so kind as to have a look at what I’ve asked Graham and see if I may be massively wrong ?
I welcome long-term decision making and this seems like the right decision. But to put it in context it will take over 25 years before any money is saved – the damage has already been done. If breaking from rental agreements helps with the repair and maintenance of properties then perhaps that is the biggest benefit rather than financial.
The state of the housing has always been known to be ‘subpar’ let’s say. My mother always goes on about how awful some of the places were and it had impacts on big career decisions for my dad as a result. If it helps improves retention even slightly that’s a massive win with the current challenges, long-term financial savings are always an uncontroversial idea to implement on top of that.
This is truly shocking.
Excellent move.
Apologies for the incoming rant…look away if you’re of the economic liberal persuasion..
The 40 year political experiment in privatisation and outsourcing seems to clearly demonstrated that it is no panacea.
Good quality organisations need a lot of investment to build the necessary skills and culture, and this can’t be done on the cheap. We can all see that this is true from the professionalism shown by our excellent Armed Forces. I spent years being trained before they’d let me do anything important (and even then they clearly weren’t completely convinced 😂).
We need to end the political dogma that the private sector is automatically better. I’ve worked in both and the amount of waste on pet projects in many listed companies is amazing. Many UK businesses aren’t very well run – the amount of duplication and internal empire building is quite awesome to behold (but well hidden from shareholders).
That’s not to see that the private sector isn’t performing well in some key critical areas (food is an obvious example) but we shouldn’t automatically assume it’s always the right model.
Sorry for the moan. It just gets my goat how many assumptions we hold about the world are still so persuasive despite the obvious evidence to the contrary.
It was a particularly awful deal and I am surprised and pleased they have managed to unwind it.
The ultimate weirdness was that MoD was responsible for the maintenance – which was actually the big problem as if the maintenance was commercial they would have had to improve them as the rules have been tightened on electrical/gas safety and damp.
It was a classic case of cash today to balance the books and put the pain off for a few years in the hope of better funding.
Defence has repeatedly been promised a better settlement as this is repeatedly forgotten as governments and ministers change.
John majors government sold these off cheap, cocked up the railway privatisation. Seems he owns several properties himself so sees no economic value in renting! Perhaps his policies were designed to boost his future city career!
‘According to the MOD, the arrangement will not only end spiralling maintenance costs but also enable large-scale redevelopment, with plans to build modern, energy-efficient homes across the military estate’.
MoD thinks that buying back some of the SFA will end maintenance costs. It won’t; maintenance will still cost the MoD money, as it did during the period of ownership by Annington and in the MoD-owned era before 1996. This ‘deal’ does not set the conditions that guarantee that MoD will build the modern homes suggested; if anything it weakens it as MoD will be cash-poor in ‘the housing column’ after shelling out £6bn.
The properties should probably be requisitioned, for a small fee under state emergency . The private companies have been robbing the public for the last 20 yrs under labour and Conservative. Its good this present govt has recognised a huge problem and is starting to try and resolve it . So thumbs up for once
The MOD (or to be precise us) is £7.8 billion worse off. So who is £7.8 billion better off . . . ?
Chris, the answer is surely…Annington Homes. They will be laughing all the way to the bank.
The 1996 deal was poor value and completed under the Minister of Defence “reign’ of a an individual who is & has done, railway travel programmes. Another here today and gone tomorrow politician.
Well MOD can make some money next year by selling off Claro barracks in Ripon when 21 joins 32 Engr Regt in Mayne Barracks in Catterick!
Or does that money go straight to the treasury? Let me guess🤔
In retrospect the Civil Servants and politicans who drafted and approved the original scheme had no foresight – blind in one eye and unable to use the other to forensicly study accounts and plan accordingly while listening to the calls of “good plan old boy” promulgated from the cash registers of commercial property managers.
The defence budget in 1996 was ~ £22 billion, so this seemed like a huge payback and of course there was no money to pay for modernisation that the houses needed in 1996. There is an article in the Guardian that explanes how the MOD made such a mess of this
Who to be given too though if anything like Andover is part of the proof, I’d propose a bold new scheme right and here now anyone who does 22 years and put on a reserve list until they age our should receive a house shitbust from the government, that is a retention scheme right there and a half but it will never happen under these money grabbers
Who to be given too though if anything like Andover is part of the proof, I’d propose a bold new scheme right and here now anyone who does 22 years and put on a reserve list until they age our should receive a house shitbust from the government, that is a retention scheme right there and a half but it will never happen under these money grabbers we should also be tax free along with the NHS and Police but it will never happen
Given how much profit Guy Hands must have made on this outrageous deal, the government should have taken them back at zero cost. The politicians and civil servants who agreed the terms should be charged with misconduct in public office.
In terms of value for money privatisations were poor, Rail -Railtrack, was sold for 1.95 billion while worth 6.5 billion . To make maters worse 1.5 billion of debts were written off to sweeten the deal . This should have brought criminal charges . Figures from bringbackbritishrail.org. Labour also claimed 5 billion a year was the cost of rail privatisation !