At the moment, Addington rents home to the MoD at a discounted rate, while taxpayers foot maintenance bills.
A recent Commons defence committee concluded that two-thirds of homes for service families need “extensive refurbishment or rebuilding” to meet modern standards.
It is hoped the new deal will allow the MoD to work on redevelopment and improvements to modernise the homes, which would in turn reduce maintenance bills.
It will also save £230m in annual rental costs, officials said, and pave the way for the construction of new homes.
The old deal prevented the MoD from being able to demolish homes to build newer accommodation.
Healey described it as “dreadful”.
The process of taking the homes back into public ownership began under the Conservatives, with the MoD winning a legal battle in 2023 to take some of the properties back.
UK chief of defence staff Sir Tony Radakin welcomed the deal and called it a “crucial step in being able to deliver meaningful change for those who serve”.
Two years ago, the BBC reported on military families living in damp and mouldy conditions. At the time, the MoD said it was working with its contractors to improve the service.
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