Rayner faces battle in European Court of Human Rights in row over military housing

Angela Rayner is facing a European court battle with private equity baron Guy Hands over military housing owned by the financier.

Mr Hands’s Annington Homes, which is owned through his private equity firm, Terra Firma, has filed a legal claim against the Housing Secretary with the European Court of Human Rights.

The case centres on the Leasehold and Freehold Reform Act, which was introduced by the previous government in May but which now falls under Ms Rayner’s brief.

The Act, which was introduced by Michael Gove, gives tenants stronger rights over ground rents and lease extension. It includes provisions on so-called enfranchisement, which gives leaseholders the right to buy the freehold of the property.

Mr Hands has concerns about the impact of the law on Annington’s vast estate of 55,000 homes, which it leases out to the Ministry of Defence (MoD) for housing military personnel.

Annington has argued that the law is too vague and could open a loophole that would harm its ownership.

Mr Hands fears leaseholders could acquire freeholds to his properties at a below-market rate, which would severely harm its business model. The private equity investor has brought the case under a provision in the European Convention on Human Rights guaranteeing “the peaceful enjoyment” of property.

The case is the latest twist in a long-running dispute between Annington and the Government over the vast military accommodation estate, known as the Married Quarters Estate.

The Government sold its military housing portfolio to Annington for £1.7bn in 1996. Terra Firma bought Annington in 2012 for £3.2bn. The Government has been seeking to unwind the deal for years, saying it has wasted taxpayer money.

According to Parliament’s public accounts committee, the decision to sell the homes was “disastrous” because the MoD must pay Annington millions in rent every year for the property.

The claim against Ms Rayner is not linked to an ongoing legal dispute between Annington Homes and the MoD over who has the rights to the properties.

Annington is seeking to clarify how the new Leasehold and Freehold Reform Act will impact its ownership and has taken the case to the EU’s human rights court in Strasbourg. It filed the same challenge to the provisions of the Act at the British High Court last month.

The case is against Ms Rayner in her capacity as Secretary for Housing, Communities and Local Government, rather than in a personal capacity. The claim has been issued on a protective basis, meaning it is seeking clarity from the Government on how the provision of the new law should be interpreted.

The company said in a statement to the stock market: “If relevant provisions of the Act were applicable to Annington once in force, which Annington does not believe to be the case, Annington would be at risk of receiving significantly less than market value for that intermediate leasehold interest in the event of its enfranchisement.

“Annington has brought this claim on a protective basis, pending clarification from the Government, which may resolve the matter.”

The Department for Levelling Up, Housing and Communities said it was unable to comment on any active legal proceedings.