Billionaire Guy Hands’ property firm takes housing reforms to European court

A property company linked to the billionaire Guy Hands has taken a legal fight with the UK government to the European court of human rights over fears it could lose significant sums as a result of planned housing reforms.

Annington Property, which is an intermediate leaseholder and has a 999-year lease on about 38,000 military homes, has filed the claim against the housing minister, Angela Rayner, over concerns that the new Leasehold and Freehold Reform Act could potentially affect the value of some of the homes if the government took them back. . Last month it launched a challenge in the high court on the same grounds.

The company said it had launched the cases to get clarity on certain aspects of the reforms , including if they impacted intermediate leaseholders, and has warned that more companies could launch similar legal challenges.

Related: UK government wins right to take back control of military homes worth £8bn

The UK government sold off the homes, known as the Married Quarters Estate, to Annington in 1996, in a deal worth £1.7bn. Hands’s company Terra Firma bought Annington from Nomura Holdings in 2012 for £3.2bn.

The Ministry of Defence has a contractual lease agreement with Annington and pays rents for the properties under the long-term arrangement.

In January 2022, the MoD said it was hoping to take back full ownership of the homes through enfranchisement rules under existing leasehold legislation.

Last year, a high court judge ruled the government had the right to take back control of the homes, now valued at £8bn, labelling the previous privatisation “a bad deal” for the government. Annington is appealing against the decision.

The Leasehold and Freehold Reform Act secured royal assent in May in one of Michael Gove’s final acts as housing secretary.

The act, which is not yet in force, will bring in laws to make it easier and cheaper for leaseholders to buy their freehold, as well as a mechanism for calculating how much compensation should be paid to freeholders, and, potentially, intermediate leaseholders, like Annington.

Annington has now launched legal challenges in both the Strasbourg court and the high court on a “protective basis” in an attempt to get clarity regarding the mechanism.

In an update explaining its position, Annington said: “The mechanism as currently drafted in the act, appears to give rise to the possibility that, in certain specific circumstances, a lessee could acquire the freehold and intermediate leasehold interests for a very low valuation that does not reflect market value.”

The company said that, while it believed it would not be affected under the terms of its contract with the MoD, there was a risk that the judge could interpret the act differently and Annington could receive “significantly less than market value” for the homes.

The claim has now been filed in both courts to ensure the company does not lose its right to a later challenge under statute of limitation rules.

The legal action is separate to Annington’s litigation with the MoD regarding its attempt to enfranchise the Married Quarters Estate.

Hands, who is one of Britain’s highest-profile private equity investors, launched Terra Firma in 2002 and has since overseen more than £15bn in investments in 39 businesses, including the record label EMI, Tilia Homes and Welcome Hotels.

Last year, he stepped down as chair and chief investment officer of the company, with his son Richard Hands, its managing director, and Paul Hatter, who is chief operating officer, now leading the company.

The Ministry of Housing, Communities and Local Government declined to comment.