Background to the report

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.

Jump to downloads

In 2018 we reported that, as a result of the 1996 deal, the MoD had lost out on billions of pounds in asset value and that it had not been properly carrying out its retained management and maintenance responsibilities for the estate. In December 2024, the MoD announced that it had agreed to repurchase over 36,000 SFA properties from Annington Homes at a cost of £6 billion. It said this deal would save the taxpayer billions of pounds in rent and allow it to undertake a major redevelopment of the estate.

Scope of the report

This report examines whether the MoD’s repurchase of its service family accommodation estate represented good value for money. The report examines whether the MoD:

  • had a strong rationale for the repurchase 
  • followed good practice in preparing for and carrying out the repurchase 
  • achieved a good price for the estate

Video summary

Hedley Ayres, Senior Audit Manager, summarises our findings.

Conclusion

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.

The process that led to the repurchase demonstrates the value of using the expertise available to government in the form of bodies like UKGI.

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.

Downloads

Press release

View press release (26 Jun 2026)

Publication details

Topics