MoD fails to ensure windfall profits are returned to taxpayer or development occurs, says opposition. Property companies have made millions of pounds by buying land from the Ministry of Defence and applying for planning permission, before selling on the sites. Sites with space for 55,000 houses have been sold off including Fort George in Scotland, two York barracks and five golf courses.
In several cases, no building occurred before the resale; on other sites, no development at all has occurred years after the original sales. In most cases, the MoD failed to ensure that any of the windfall profits were returned to the taxpayer.
Nia Griffith, the shadow defence secretary, said the transactions were appalling and the MoD should have ensured the developers could not simply sell the land on at a large profit.
“The absurd thing is that there is a mechanism when you dispose of land to claw back some of the profits,” said Griffith. “That is quite standard among local authority sales. It is bizarre that the MoD doesn’t do it.”
The property company IM Land bought part of the former MoD Ensleigh site outside Bath for £17.1m in June 2013. Within less than three years, approximately a third of the site was sold to housing developers for £11.3m.
Further smaller parcels of land have been sold for almost £10m and IM Land, which is owned by the Conservative donor Lord Edmiston, still owns around a third of the site.
Houses on the site are being built by Linden, which is part of Galliford Try, and Bloor Homes, which was founded by the Conservative donor John Bloor. The average house price rose by 23% between 2013 and 2016, according to Land Registry data.
A spokesperson for IM Group said: “MoD Ensleigh was acquired by IM Group following a full marketing campaign conducted by the MoD and their appointed advisors. This marketing campaign determined the open market value achievable for the site.”
In June 2013, RAF Brampton, just outside Huntingdon in Cambridgeshire, was sold to a Jersey-based company called JCAM Commercial Real Estate Property for £10.1m. Over the past two years, the land has been sold off in parcels for more than £28m. Part of the site was sold to the Metropolitan Housing Trust housing association for £14.5m.
Tim Leslie, the founder of JCAM, said his company had demolished buildings on the site and spent money on roads, as well as making payments of £7.3m through the community infrastructure levy and to the council.
“Buying land without planning permission is a risky business and, when successful, the returns should reflect that,” said Leslie. “Our gain will be in line with what we expect to make when we buy land and then achieve planning. Clearly, if the MoD had achieved a planning consent and then sold the land, they would have achieved a significantly higher price.”
Another former MoD site in Bath was bought by the property developer Square Bay for £12.5m in March 2013. It was sold on in March 2016 for £29m.
Square Bay was also involved in buying Fremington training camp in north Devon, which was sold in December 2010 for £3.4m.
The members of the partnership set up to buy the training camp, Fremington Developments LLP, included companies registered in the British Virgin Islands, Switzerland and Hong Kong.
In February 2014, three years and two months after the land was bought from the MoD, it was sold for £10.1m to Bovis Homes and a division of Barratt Homes.
Markham Hanson, a partner in Fremington Developments and the managing director of Square Bay, said the company had spent more than £1m to achieve planning permission on the Fremington site.
Hanson said the land had been bought on the open market, following a marketing campaign by the MoD. Hanson said: “We acquired the site without planning consent and with a high degree of risk attached due to the fact that the site had some challenging access issues that needed to be overcome, and a slow development market in the UK at the time.”
The sales come after the controversial purchase of thousands of MoD houses by Annington Homes, a company owned by a Guernsey-based fund managed by the private equity tycoon Guy Hands.
A MoD spokesperson said: “We look to achieve the greatest return for the taxpayer when selling land and have made over half a billion pounds in sales since 2010. Every penny is reinvested back into our armed forces.
“Applying for planning permission before selling land does not always provide the best value for the taxpayer. It can delay the sale, is not always granted and can restrict the freedom of potential buyers to develop the site according to their needs.”