MoD’s ‘disastrous’ military housing deal cost taxpayer £14.5bn, says NAO report

“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 £14.5bn worse off than it would have been had it not entered into the deal with Annington,” the report said. 

In December 2024, following a deal struck with Annington in 1996, the government agreed to buy back 36,347 military homes for just under £6bn, having spent decades paying rent to the private equity-backed firm.

Many of the SFA homes are now in need of urgent repair after years of neglect.

In 2024, the Kerslake Commission on Armed Forces Housing found the backlog of repairs could cost £4bn.

A Freedom of Information request submitted by Inside Housing found that 9,359 SFA properties were listed as void as of 7 April this year.

According to the NAO report, the inadequate condition of the SFA estate is the “consequence of poor management and lack of investment from the MOD”. 

“The terms of the original Annington deal meant the MOD had little financial incentive to improve the condition of the estate,” it said. 

The NAO said MOD policy has “long been” to carry out only essential maintenance to the minimum safe and legal standard. 

“Consequently, the condition of the estate deteriorated significantly, resulting in low rates of satisfaction in housing by service personnel,” it added. 

The NAO said the scale and nature of the challenge to deliver the Defence Housing Strategy is “huge”, but the MOD “currently does not have the experience or expertise to deliver it”.

The government’s proposed new Defence Housing Service will be responsible for a £9bn “generational renewal” of homes for Armed Forces families.

It is looking at options to boost supply by building up to 100,000 homes on defence land.

The NAO report concluded that 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,” it said.