Army families suing the Ministry of Defence over the squalor of their living quarters are being issued with “bullying” ultimatums to drop the claims or face having their pay docked to cover the legal costs. Documents obtained by the Guardian suggest the threat of further financial pain amid a deepening cost of living crisis is being exploited by government lawyers to keep compensation cases out of court. Hundreds of military families are understood to be looking to legal redress at a time when the service family accommodation (SFA) system has been overwhelmed with complaints. The MoD has not been turning up to defend legal claims already lodged, made on the grounds that the government has failed to provide safe and well maintained homes. Government lawyers have instead sent aggressive letters warning that unless the claims are discontinued that the MoD will seek full costs in the event of a subsequent judgment in their favour. The strategy has even been deployed where the county court has given a “default” judgment in favour of the military family in cases where the MoD has failed to defend a claim. In correspondence seen by this newspaper, a senior government lawyer wrote: “The purpose of this letter is to make an open offer to you that if you will agree to the order granting judgment in default being set aside and that you will discontinue the claim by a process of consent order (a copy of a draft of which is enclosed), the MoD will not seek its legal costs of this process. “If, however, you do not agree to this by the end of Wednesday, 14 September 2022, we shall issue the application and seek the full legal costs of the MoD”. In a letter to a second claimant, the same government lawyer, acting for the Treasury solicitor, wrote: “If you will not agree, and you will put us to the trouble and expense of a contested application, we shall seek the MoD’s legal costs (which, I have little doubt can be recovered by deduction from your pay). Please respond no later than 4pm on Monday, 3 October 2022.” When approached, the lawyer behind the correspondence declined to comment. A spokesperson for the Ministry of Defence said: “These cases relate to rented property outside the UK. We will not comment further on it due to ongoing legal proceedings.” The revelations drew cross-party condemnation. The shadow defence secretary, John Healey, said: “This is utterly unacceptable. Ministers must call off the MoD’s legal dogs and drop these threats to forces families. “When service families have to resort to court to get basic repairs done, it confirms deep failings with service accommodation. Yet ministers have no proper plan to fix the problems.” Mark Francois, a former Tory armed forces minister, said: “Ministers must clearly intervene urgently, to sort this dreadful mess out.” Tobias Ellwood, the Conservative chair of the Commons defence select committee, said: “All service personnel and their families deserve a proper standard of accommodation. “When not on operations this is where those in uniform spend their time and it is where the family call home. Increasingly it is the constraints and pressures on family life that tip the balance in obliging serving personnel to exit the military.” A whistleblower said the MoD was seeking to “bully” service personnel but that a growing number of service personnel were preparing to take legal action in the face of a failure of the MoD to ensure their homes were of a decent standard. According to documents obtained by the Guardian, one service family, following a successful claim at county court, secured a high court writ and sent bailiffs to the headquarters of the MoD’s Defence Infrastructure Organisation in Lichfield in Staffordshire. A senior MoD official appealed to the bailiff to leave without taking away property in lieu of payment as it “could go all over the news”, according to a report of the incident on 4 October. Alfie Usher, a former paratrooper who now runs the claims management company Claims Bible, said he had received 400 expressions of interest in the last fortnight from service personnel interested in making a case against the MoD, of which he expected 100 to meet a threshold for a claim. He said: “They include cases of black mould and there are reports of asbestos. One guy who found asbestos in his kitchen, he was told just to avoid the area. Heating is a big one as well, especially with those who have kids. “A claim is the only way: when it starts costing them money, the MoD will start listening. It is no win, no fee, and in the worst case scenario when we make a claim the MoD will come round and fix it.” The state of the homes rented out to armed forces personnel and their families has long been a cause of concern. Under a 1996 deal brokered by the then defence secretary Michael Portillo, about 57,000 such properties were sold to Annington Homes for £1.66bn. The company is now owned by Terra Firma, the private equity giant founded by billionaire Guy Hands. Under the deal, the government took out a 200-year lease on the homes in order to continue to provide accommodation to service personnel. The MoD retained responsibility for repairs and maintenance. Without being able to capitalise on the increase in the value of the properties, the MoD has struggled to maintain the ageing housing stock. Four years ago, the National Audit Office found that increases in housing prices meant the government was between £2.2bn and £4.2bn worse off than it would have been if it had retained the property portfolio. In September, the MoD’s Defence Infrastructure Organisation was forced to apologise about the “unacceptable” service provided by three outsourcing companies awarded £650m contracts to deal with complaints, home allocation and maintenance.