A prominent Labour Member of Parliament has demanded a “comprehensive investigation” into the allocation of public funds for renting accommodations from the controversial social housing provider, Home REIT.

Clive Betts, who serves as the deputy chairman of the Public Accounts Committee, emphasized the need for increased scrutiny following the Serious Fraud Office’s (SFO) recent announcement of an inquiry into bribery and fraud related to the company. This announcement came after raids and arrests were conducted on Wednesday.

This marks the latest development in the ongoing saga surrounding Home REIT. Established in 2020, the organization pitched itself as an ethical fund aimed at addressing homelessness, successfully drawing in £850 million from investors.

The fund focused on acquiring dilapidated properties, which were purportedly to be leased to charities for housing vulnerable individuals, with rent covered by housing benefits.

However, the situation deteriorated within two years when issues surfaced regarding the inflated prices paid for properties, questionable payments to middlemen, and the tenants’ ability to meet rent obligations. Betts suggested that an investigation into the involvement of taxpayers’ money should also engage the National Audit Office or the Department for Work and Pensions.

“Initially, this seemed like a project where investors were channeling their resources into something beneficial and proper,” Betts stated to The Mail on Sunday. “A thorough investigation is necessary. The company appears to have failed in every aspect.”

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.

Family forced to fix firm’s botched renovation 

A family living next to a house wrecked by Home REIT in botched renovations were so fed up waiting for it to be made safe they bought it themselves.

Craig Hyde, who lives with his wife Helen and their two children in the seaside town of Morecambe, Lancashire, said a criminal investigation into the firm was ‘always going to happen’ and that its bosses needed to be ‘held accountable’.

The property next door was meant to undergo renovations to provide ‘high quality’ accommodation for vulnerable people – but was left in a dilapidated state for more than two years after money ran out.

Dilapidated: Craig Hyde had to buy the house next door and do it up himself after Home REIT’s renovation stalled, leaving his own house exposed

Contractors had partly knocked down the rear due to subsidence, leaving a roof hanging in mid-air and vulnerable to high winds.

Meanwhile, an internal dividing wall between the houses was left exposed and had to be covered in plastic sheeting for two winters to keep out the rain. As a result, the Hydes’ house was bitterly cold and damp.

The situation became so intolerable that the family spent £20,000 of their own money to buy the neighbouring property. They have so far shelled out a further £30,000 on renovations and repairs.

Hyde, 48, a maintenance supervisor, said: ‘I couldn’t get through to them to have the problems resolved. After to-ing and fro-ing for the best part of a year, I said, ‘I’ll give you £20,000 for it’ and they said ‘Yes’. It was nowhere near up to standard and had been left a death trap.’

Since then, Hyde and his wife, a hospital nurse and discharge coordinator, have faced further problems including obtaining planning permission to rebuild at the rear. He said: ‘I’d like to see those in charge held to account for all that’s happened.’

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