We have condensed key facts and other important information about Annington into short, easy-to-read chapters.
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Annington was created in November 1996 with the purchase from the Ministry of Defence (MOD) of a 999 year lease in 55,060 homes (the “Married Quarters Estate” or MQE), the freehold of 2,374 homes (the “Surplus Estate”) and a number of related assets. The price paid was £1.67 billion plus a further £161 million from a profit sharing arrangement that ended in November 2011.
The MQE was leased back to the MOD for 200 years at a discount of 58% to open market rent. This discount is reviewed site by site, and will become effective in four tranches between 2021 and 2024.
38,726 properties from the MQE are still let to the MOD at an average annual rent of £4,641.
The MOD can terminate a lease (on an individual unit or blocks of units) by giving six months’ notice to Annington, which then has an automatic right to acquire the freehold on these ‘released’ properties.
Before sale, most properties undergo significant refurbishment to improve the general environment and street scene and to remove any obstacle that might make it difficult to get a mortgage. A small number are used in redevelopment schemes where Annington can realise significant added value by gaining planning permission, after which it might sell the land, redevelop the site or enter into partnership with a third party. The current released stock is 251 units.
Nearly 19,000 properties have been sold and 46% of sales to private individuals have been to first time buyers.
In 2012, Annington was acquired by a Terra Firma investment fund and, in 2017, was re-financed. The transaction, worth a total of c.£4 billion, transformed Annington’s capital structure from relying on a securitisation structure maturing in 2021 to having an investment grade financing with staggered maturities as far out as 2047, along with an additional £550 million of new equity.
Annington is already one of the UK’s largest PRS landlords and recent acquisitions will increase its portfolio by c.400 units.
Annington is also investing in its strategic build capability and has over 200 pipeline units on acquired sites.
The MOD provides a Minimum Guaranteed Rental payment which reduces annually in accordance with an agreed schedule over the period to 2021.
The MOD, through the Defence Infrastructure Organisation (DIO), has sole responsibility for the condition of the married quarters and for their management and maintenance. The management of the DIO is currently outsourced to Capita, a strategic business partner.
The number, location and timing of releases is at the sole discretion of the MOD.
Released properties are required to be handed back in ‘good tenantable repair and decorative order’, otherwise Annington is able to claim dilapidations from the MOD.
Apart from condition, other principal issues include title and the condition and routing of utility services.
The MOD reported that there were more than 8,000 void units in their Estate in England and Wales, nearly all of which were leased from Annington. Units are left empty for a number of reasons: to provide a management margin, substandard properties, a lack of funds for upgrade or redevelopment, vacancies awaiting redeployments of troops, temporary accommodation while properties are upgraded, and genuine voids arising from a lack of demand. The MOD’s housing requirement is dependent on long-term defence strategy.
The Strategic Defence and Security Review (SDSR) 2010 set the tone for a radical reorganisation of the Armed Forces - the number of service personnel has dropped from 180,000 servicemen to 137,000, there has been a withdrawal of 15,000 troops from Germany (with another 5,000 to come by 2019) and a widespread rebasing of units within the UK is under way. This has far-reaching implications on the MOD’s requirements for housing; so far, the effect on Annington has been minimal.
The properties are/were used by the MOD to accommodate service families.
The properties are in England and Wales only – those in Scotland and Northern Ireland were not included in the sale. The properties range from two bedroom flats to eight bedroom houses, from Cumbria to Cornwall and South Wales to Suffolk.
80% of the stock comprises ‘Other Ranks’ accommodation, predominantly 2 and 3 bed terraced or semi-detached properties, the balance ‘Officers’.
Density averages 10 units/acre or 25/hectare which, under current Government guidelines, can provide infill and redevelopment opportunities in some circumstances.
There are broad differences in the quality and condition of the stock, with 10% of all properties of non-traditional construction.
Annington believes in providing good quality, value for money homes.
Annington always tries to offer its homes at competitive prices with the most appropriate financial incentives and, by doing this, aims to make house purchase accessible and affordable to more people.
Annington aims to create environments in which people want to live. This may involve modifying the street scene through landscaping or altering the external appearance of the homes, the aim being to add interest to streetscapes that previously had lacked either individuality or variety.
Annington will normally ensure that the homes it sells meet its ‘Safe and Sound’ specification before a sale is completed, meaning electric, plumbing and heating systems are thoroughly checked and any defects or issues that might affect a mortgage are dealt with.
Sales values vary widely and are dependent on a range of factors, from location and house type to age and condition. The average net sales price for all private sales in the 12 months to end March 2019 is £527,800 per unit.
Annington Rentals Holdings Ltd (ARHL) owns 1,607 units, comprising flats and houses let on individual and bulk leases. Some, but not all, of these are held to provide evidence of rents in the rent review process. Others are held as part of its rapidly expanding PRS portfolio (recent purchases include 104 homes from Mill Group’s Oak Portfolio for £23.8 million, 73 homes from Taylor Wimpey for £23.5 million and 207 homes from St Modwen Plc for £75 million).
ARHL manages, on behalf of APL (Annington Properties Ltd) and ADL (Annington Developments Ltd), a further 10 units. These units are rented pending the resolution of legal and utilities issues and the outcome of planning applications. Not all are available for rent.
ARHL assists DIO with the management of 78 long-term voids that are let to the general public.
ARHL currently outsources the day to day management of its rental portfolio to Touchstone Corporate Property Services Ltd and PRSim (part of LSL).
Annington Developments Ltd (ADL) will appraise opportunities for acquisition, infill or wholesale redevelopment on all sites. ADL aims to maximise added value through planning consent where appropriate. Thereafter, ADL will either sell the land, carry out infrastructure works and build out or partner with developers and house builders if there is demonstrable added value and benefit in doing so.
Annington is building over 200 units at Carterton in Oxfordshire, Little Thetford in Cambridgeshire and Allington in Wiltshire.
It has joint ventures with Countryside Properties plc on sites at Colchester (261 homes) and Mill Hill (395 homes) and participates in a large partnership development at Mill Hill in London (up to 2,200 homes).
The Annington Trust was established in 1996 "for the benefit of service families living on the patch", with the objective of sponsoring community activities and projects. Since then, the Trustees have disbursed over £748,186 to support over 480 projects. The grants have varied from a few hundred pounds to major awards of several thousand pounds.
The Trust supports RBLI’s LifeWorks for Families with an annual donation of £25K. This free support service helps military spouses and partners get the job they want by developing key employment skills. Furthermore, in 2018, Annington pledged £250K over three years to the RBLI’s Centenary Village Campaign, a project which aims to build 100 homes for veterans at the charity’s village in Kent.
Annington complemented The Trust’s support of the Royal Marines Tadpoles Nursery with a further donation of £10K in 2018 which allowed the nursery to make vital improvements to their facilities.
In 2018, we continued our support of a number of Service and non-military charities plus entered into new funding agreements with several more.
Designed specifically for Service youngsters living on ‘the Patch’ and run in conjunction with the Outward Bound Trust®, the Annington Challenge aims to provide youngsters with the opportunity to experience their very own outward bound adventure and gain valuable life-skills in the process. Having been developed by the Trust in 2012, Annington took over support of this initiative in 2018 and, while doing so, increased its annual donation to £50,000. Since its inception over £210K has funded places for more than 290 young people.
Reading Force supports the social, emotional and mental wellbeing of Forces families through the experience of shared reading. Our three year commitment of £100K has allowed the charity to recruit its very first Ambassador for Scotland.
FirstLight Trust offers practical support for UK Armed Forces and Emergency Service veterans. Annington’s 2018 donation of £35K will fund the salary of the charity’s first Operations Manager.
In 2018, Annington donated £100K to The Silver Line - the only free confidential helpline providing information, friendship and advice to older people, open 24 hours a day, every day of the year.
Pending release (terminated by MOD): 1
From MQE and Surplus Estate: 18,441
New Build and Related Assets: 293
Units Sold: 18,734
*Includes 11 consolidated units