A property company owned by private equity investor Guy Hands has lost a test case with the government over plans to buy back an estate valued at as much as £8bn.
Annington Property is trying to block plans by the Ministry of Defence to buy back some of the 60,000-home estate at a court-appointed price. Annington is backed by Hands’ Terra Firma Capital Partners.
Annington bought a 999-year lease to the MoD married quarters estate in Bristol and Cranwell in Lincolnshire for £1.7bn in 1996 and rented it back to the MoD. Increased property prices in the past 25 years mean the estate is now valued at around £8bn and generates significant sums in rent.
The central issue in the case was whether the government could use its rights as a freeholder to buy back the properties. Annington’s argument was that as the freehold is effectively owned by the Crown, it is not governed by the same freehold and leasehold laws as a private company.
However, in his ruling today, trial judge Mr Justice Holgate found that the government could use the leaseholder enfranchisement rules to buy back the eight properties that made up this test case.
He made a declaration that the properties were validly enfranchised, and dismissed the case.
“The High Court has found that MoD does benefit from a right to enfranchise,” said Natasha Rees, senior partner at law firm Forsters, who advised the MoD.
“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 said it plans to appeal.
“We are surprised and disappointed by the outcome,” a spokesperson said. “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.”
Annington Property Ltd and others v Secretary of State for Defence and others
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