A report from independent public spending watchdog, the National Audit Office (NAO), looks at the process by which the Ministry of Defence (MOD) bought back 36,000 homes for service families; homes which were sold in 1996 and subsequently leased back at huge cost to the taxpayer.
The report estimates that the public purse is some £14.5 billion worse off as a result of the selling the properties in 1996.
Setting out an overview of the background to the 2024 deal, the repurchase agreement, and plans for the future provision of Service Family Accommodation (SFA), the NAO report finds that the repurchase puts a stop to what would have been billions of pounds of further lost value had the MOD allowed the previous arrangements to continue.
The 2024 deal to repurchase was the lowest cost of the options considered in a process that was largely handled effectively, the report says.
Defence Housing Strategy
Challenges remain for MOD, however, including delivering on the 2025 Defence Housing Strategy which requires MoD to become a property developer, regeneration organisation and a housing service. But, the report says, it doesn’t yet have the necessary expertise or capacity.
The NAO report makes a series of recommendations for the MOD, indicating that the Ministry should:
- Seek to learn from others in government about the different models for bringing in the private finance and private sector expertise required to deliver its plans, and the benefits and risks of the different approaches;
- finalise its long-term funding plans for the defence housing estate;
- establish the Defence Housing Service with the powers and autonomy it requires to deliver the planned reform efficiently; and
- prepare, and publish a summary of, its plans and timeline for the refurbishment and rebuilding of the housing estate and release of land for housebuilding.
Gareth Davies, the head of the NAO adds: “Repurchasing MoD’s service family accommodation has avoided further lost value and now provides the opportunity to deliver the ambitions of the Defence Housing Strategy. The MoD’s experience remains a cautionary tale about the risks to long-term value for money that are inherent in sale and leaseback transactions.”
Natalie Elphicke Ross OBE, the Chair of the Defence Housing Service, added: “I welcome the NAO’s report, which confirms the decisive action to repurchase military housing put a stop to billions of pounds of further lost value to the taxpayer.”
“We are already delivering on the historic opportunity unlocked by the deal, upgrading military homes across the UK and making a real difference to the lives of thousands of service families. The new Defence Housing Service will bring the focus and specialist expertise we need to transform military homes, driving forward a decade of renewal and backed by the £9Bn Defence Housing Strategy.”
