A top Labour MP has called for a ‘full investigation’ into how taxpayers’ money was spent renting homes for vulnerable people from scandal-hit social housing landlord Home REIT.
Clive Betts, deputy chairman of the Public Accounts Committee, said more scrutiny was needed after the Serious Fraud Office (SFO) announced a bribery and fraud probe into the firm following raids and arrests on Wednesday.
It is the latest twist in the long-running scandal of Home REIT, which was created in 2020 and sold itself as an ethical fund helping tackle homelessness, attracting £850 million of investor cash.
The fund bought run-down properties which it said would be let to charities to house vulnerable people whose rent was paid through housing benefit.
But it unravelled two years later after concerns were raised over the inflated prices it had paid for buildings, as well as payments to intermediaries and the ability of its tenants to pay their rent. Betts said an investigation into the role of taxpayers’ money in the Home REIT scandal should also involve the National Audit Office or the Department for Work and Pensions.
‘This started off seeming to be a project where investors were putting their money into a good and proper use,’ he told The Mail on Sunday. ‘There needs to be a full investigation. The company seems to have failed on every count.’
Calling for action: Clive Betts, deputy chairman of the Public Accounts Committee, said more scrutiny was needed
Matt Downie, head of homelessness charity Crisis, said: ‘We back calls for a further investigation into how taxpayers’ money to help people in times of hardship is being misused. It’s abhorrent that people who are vulnerable, including those forced to sleep rough, have had to live in accommodation that is substandard, while providers have allegedly made hundreds of millions of pounds in the process.’
Meanwhile, investors in a class action lawsuit against Home REIT welcomed the SFO investigation.
James Carthew, head of research firm QuotedData and a Home REIT investor, said: ‘This has been the worst example of malpractice in the investment sector I have seen in my 40-odd year career.
‘I and many others put money into a company that we thought would earn modest returns and a decent dividend yield, but most importantly would help address the blight of homelessness.
‘If, as it seems, individuals conspired to defraud Home REIT, they deserve to be punished. The SFO investigation is very welcome but it feels a bit late in the day. I hope that justice will be served.’
Nathaniel Barber of law firm Harcus Parker, which is representing 750 shareholders in the class action, said: ‘The great British public have been misled about investing in Home REIT.
‘Savers lost hundreds of millions of pounds as a result and we are pleased to see actions taken by the criminal investigation authorities.
‘It’s very disappointing to see people who thought they were investing in an ethical company may have been swindled.’
Home REIT’s problems were exposed in November 2022, when short-selling firm Viceroy Research raised concerns about its finances and business model. Its shares were suspended in January 2023 after the company failed to submit its 2022 accounts.
Allegations of malpractice were repeatedly highlighted by The Mail on Sunday and the Daily Mail.
While investors had been assured tenants would be housing associations in a secure financial position, it turned out many were ‘new companies or organisations which didn’t have much substance’, a source close to shareholders said.
There were ‘sweetheart deals’ where charities were given incentives to take on properties with periods of free rent, meeting occupancy targets but affecting Home REIT’s income, it is claimed. Some stopped paying rent in rows over responsibility for renovations.
The firm eventually admitted its 2,500-home property portfolio was worth a fraction of what it had paid, with an independent assessment valuing it at £413 million, not the £977 million purchase price.
In 2024 Home REIT began winding down after failing to refinance £114m of debts. Disposals included large deals where 1,800 properties were sold for £270m. It now has 153 properties worth £18.3m. Efforts by shareholders to receive compensation were dealt a blow in May when Home REIT’s fund manager Alvarium was declared insolvent.
The SFO said its action was part of a ‘new bribery and fraud investigation into the past management of Home REIT’, with the suspected offending having ‘an estimated value of £300 million’.
It raided homes in Altrincham, in Greater Manchester, Maidenhead in Berkshire, as well as London and a commercial site in Manchester. A property in Italy was searched by police in the investigation.
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