The recent high profile test case of R (Annington Property Ltd) & Ors v Secretary of State for Defence & Ors [2023] EWHC 1154 (Admin) decided that the Ministry of Defence (MoD) was able to enfranchise eight homes used by military personnel under the Leasehold Reform Act 1967.
The case involved an examination of complex issues of public law and government decision making, previous case law on whether an underlessee can enfranchise to acquire a superior interest in circumstances where they or a connected company are the freehold owner, whether the MoD occupied the property demised by the underleases for the purposes of its business pursuant to the Landlord & Tenant Act 1954 and the effect of that on the right to enfranchise and the exercise of enfranchisement rights by Government departments.
The background to the case involved a sale and leaseback agreement that was entered into in 1996 between the MoD and Annington Property Ltd (Annington) in respect of homes used by military personnel. The MoD granted 999 year leases of over 55,000 residential units and received leasebacks of the units for 200 years at discounted rents which were subject to review. As time progressed and the rent review dates approached, it became clear that the arrangement was not going to be cost effective for the MoD and did not provide adequate protection for taxpayers who were ultimately footing the bill.
Aside from buy backs and termination clauses in the leases, one option for the MoD to extract themselves from the arrangement was the exercise of enfranchisement rights. As the rights being exercised were the same as those exercisable in the private sector, constitutional principles of decision making did not apply in the same way. The MoD was successful on all issues raised, the Court finding that the MoD was entitled to make enfranchisement claims.
This case highlights the wider consideration of the Courts as to the exercise of enfranchisement rights, not only as to perceived social justice but also in order to secure the best commercial arrangement in the public interest. This reflects the long running intentions of the Government in pursuing enfranchisement reform, which is on the horizon.
If you would like more information or have any questions on enfranchisement please contact William Bethune.
