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THE MINISTRY OF DEFENCE has lost billions of pounds flogging off soldiers’ accommodation that later soared in value, auditors have revealed.
In 1996 the MoD sold off 55,000 married quarters to Annington Property Ltd for £1.66bn and then rented them back from the housing company. The sale made Annington one of the largest private owners of residential property in Britain.
More than 20 years on, the department is still shelling out £178 million a year in rent for 39,000 of those homes it sold off, according to the National Audit Office (NAO) study.
The government is between £2.2 billion and £4.2bn out of pocket as a result of the deal, the report estimates, based on actual house-price increases since the sale.
And the auditors say the government could take a further hit after 2021, when the way rents are calculated will change and be subject to negotiation. Currently the government is renting back the homes at a discounted rate.
NAO head Amyas Morse said: “The department carried out a sale and leaseback deal almost 20 years ago based upon pessimistic views of the future growth in property values, but with the mitigating feature that the rents charged to the military families who lived there were restricted for the first 20 years.
“This has cost the public sector a great deal in capital growth, and it has been a great deal for the landlord.
“In 2021 the period of restricted rents is over. The question is now whether the landlord will get a very large rent increase on top of the very substantial capital gains they have already received.”
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