Billions at stake as tycoon files a claim against Angela Rayner over Leasehold and Freehold Reform Act
Annington Property, a company associated with high profile billionaire Guy Hands, has escalated its legal battle with the UK government to the European Court of Human Rights, fearing significant financial losses due to the Leasehold and Freehold Reform Act.
The company, which holds a 999-year lease on around 38,000 military homes, has filed a claim against Secretary of State for Levelling Up, Housing and Communities, Angela Rayner, raising concerns that the reforms could negatively affect the value of some homes if the government reacquires them.
In addition to its claim in the European court, Annington had previously tried a similar challenge in the UK High Court. The company, which claims the law is too vague, seeks clarity on how the new law could impact intermediate leaseholders like itself. These legal actions are seen as a precautionary move, and Annington warns that other businesses could follow suit.
The Leasehold and Freehold Reform Act, which secured royal assent in May, introduces major changes aimed at making it easier and more affordable for leaseholders to buy their freeholds. The Act includes provisions for simplifying enfranchisement, reducing the cost of buying freeholds, and providing a clearer mechanism for calculating compensation. It also includes protections for tenants, adjustments to lease terms, and tighter regulations surrounding service charges and landlord accountability​(230232).
Annington’s concern is that the new laws could allow lessees to acquire freeholds and intermediate leaseholds at prices that do not reflect their market value. The company believes that although its contract with the Ministry of Defence (MoD) might shield it from these impacts, there is still a risk that the law could be interpreted in a way that would lead to losses.
The properties in question were sold by the government to Annington in 1996 for £1.7 billion, and Hands' company Terra Firma acquired Annington in 2012 for £3.2 billion. Currently, the MoD pays rent to Annington for these homes under a long-term lease agreement. However, in 2022, the MoD indicated its intention to take back full ownership of the homes through enfranchisement laws. A High Court ruling last year upheld the government’s right to reacquire the homes, which are now valued at £8 billion.
The legal dispute is part of Annington’s broader efforts to protect its financial position. Guy Hands, one of the UK’s top private equity investors, has overseen major investments through Terra Firma since 2002. Although Hands stepped down from his leadership roles last year, his company remains involved in significant legal and financial challenges related to these reforms.
