MoD Paid £6bn to Buy Back Military Homes Sold for £1.7bn — NAO Estimates Deal Left Department £14.5bn Worse Off
Thousands of military homes sold by the Ministry of Defence in 1996 have now been bought back, with the National Audit Office examining the long-term cost to taxpayers.
By Keep Updated UK Newsdesk
Published:
The Ministry of Defence's decision to buy back more than 36,000 military homes for £6 billion has brought renewed attention to a property arrangement stretching back three decades.
In 1996, the MoD sold much of its Service Family Accommodation estate to Annington Homes for £1.7 billion.
The department then leased the properties back.
By 2024, annual rent payments had reached approximately £230 million, while the MoD remained responsible for maintaining and managing the properties.
£6bn repurchase
In December 2024, the government announced an agreement to repurchase more than 36,000 properties for £6 billion.
The National Audit Office investigated the agreement and concluded that the repurchase represented value for money when compared with continuing the leasing arrangement.
But that did not erase the financial impact of the original 1996 transaction.
The NAO estimated that, by the time the properties were repurchased, the MoD was approximately:
£14.5 billion worse off than it would have been if it had never entered the original arrangement.
Why buy them back?
The government said ending the leasing arrangement should reduce future rent costs and provide greater control over military accommodation.
Owning the estate also gives the MoD greater freedom to redevelop, improve or dispose of properties as part of its wider defence housing strategy.
The NAO said the department used its commercial position effectively during negotiations and achieved a favourable outcome compared with continuing the existing arrangement.
A lesson for future government property deals
The watchdog nevertheless described the history of the agreement as a warning about the risks attached to long-term sale-and-leaseback deals.
Such arrangements can provide government with money immediately by selling assets, but taxpayers may then face substantial rental or financing costs over decades.
The final judgement on the £6 billion repurchase will depend on whether the MoD successfully manages and improves the returned estate.
Primary source: National Audit Office, The repurchase of the service family accommodation estate, published 26 June 2026.