The High Court has ruled in favour of the Ministry of Defence (MoD) following a legal battle with Annington Homes over its bid to reclaim an £8bn residential portfolio.
Annington Homes, the property company owned by Guy Hands, launched a judicial review in February, claiming the MoD was acting unlawfully in its bid to take back ownership of the homes for military service families sold to the company in 1996.
Law firm Forsters, which acted on behalf of the MoD, confirmed the High Court today passed judgment which found the “MoD does benefit from a right to enfranchise”.
More than 57,400 properties were sold to Annington Homes for around £1.7bn. According to documents presented to the High Court, the homes now have an estimated value of £8bn-plus.
Natasha Rees, senior partner at Forsters who led the team in the case, said: “The MoD will now consider whether enfranchisement might achieve better value for money for the taxpayer. The case involved complex aspects of the law of enfranchisement, some of which had never been decided before.”
Annington Home has confirmed it will launch an appeal against the High Court’s ruling.
An Annington spokesperson said: “We are surprised and disappointed by the outcome. It risks setting a dangerous precedent for businesses and international investors in the UK and if upheld would mean that the government can disregard long-term contracts if it believes it is in its interests to do so. As we consider this to be a matter of significant public importance, we will appeal this decision.”
An MoD spokesperson said: “We welcome the decision of the High Court, which finds that the MoD acted lawfully in seeking, successfully, to establish its right to enfranchisement.
“No decision has been taken on further enfranchisement cases, but we will consider the High Court’s decision and the potential implications for securing better value for money for the taxpayer. We continue to work closely with Annington and the MoD is focused on providing good-quality, desirable homes for service personnel and their families.”
The MoD originally sought to reclaim eight properties in Bristol, Lincolnshire and Cranwell with enfranchisement notices under the Leasehold Reform Act 1967. The act allows leaseholders to buy the freehold on residential properties for a price agreed by the courts.
Legal documents have shown Annington Homes, which was acquired by Hands’ private equity firm Terra Firma in 2012, planned to sell the property portfolio last year, but put those plans on hold to pursue the legal action.
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