Annington Property, which is managed by Hands' private equity firm Terra Firma, took legal action against Britain's Ministry of Defence (MoD) over its plan to force a sale of residential property for military families.
The company acquired a little more than 55,000 residential units for 1.67 billion pounds in 1996, in a deal which Britain's National Audit Office estimated in 2019 left the MoD up to 4.2 billion pounds worse off due to house price increases since the sale.
The British government sought to buy back a small number of the properties through a process known as enfranchisement, with a view to potentially bringing the whole portfolio back into public hands.
Annington brought a judicial review at London's High Court, arguing that the move was unlawful. However, a judge dismissed its case in a written ruling on Monday.
Judge David Holgate said the government was justified in proceeding on the basis that its deal with Annington - under which the MoD leased the properties for 200 years - has "resulted in excessive or unreasonable rates of return".
"The arrangements were and still remain a bad deal for the MoD, its (service family accommodation) estate and the public purse," the judge added.
An Annington spokesperson said the company would appeal against the ruling, which they said "risks setting a dangerous precedent for businesses and international investors in the UK and if upheld would mean that the government can disregard long-term contracts if it believes it is in its interests to do so".
An MoD spokesperson welcomed the decision. "No decision has been taken on further enfranchisement cases, but we will consider the High Court's decision and the potential implications for securing better value for money for the taxpayer," the spokesperson said.
(Reporting by Sam Tobin; Editing by Christina Fincher)
