The Serious Fraud Office (SFO) has begun a £300m fraud and bribery investigation into listed UK social housing company investment vehicle Home REIT.
It has arrested six people and searched seven sites in connection with its probe into the past management of the REIT.
The suspects in the SFO investigation, five men and one woman, are in their 40s, 50s and 70s. They were arrested on bribery and fraud-related charges contrary to the 2010 Bribery Act and 2006 Fraud Act.
Home REIT, listed on the London Stock Exchange in 2020, sold investment in its leasing of thousands of homes across the UK, raising more than £850m in its first three years of trading.
A Real Estate Investment Trust (REIT) is a company that owns, operates or finances property, allowing investors to invest in property portfolios without directly buying or managing them. The REIT’s management team buys and manages the properties.
Investors in Home REIT were told their money would be used to buy and restore properties that would be block-let to publicly funded charities and Community Interest Companies to house rough sleepers, veterans and people struggling with addiction. Returns would be generated to investors from rental income.
An investor report in November 2022 raised concerns about the company, including the valuation of its properties and the ability of its tenants to pay rent.
Home REIT suspended trading on the London Stock Exchange in January 2023 and is currently in what it describes as a "managed wind-down."
Emma Luxton, director of operations at the Serious Fraud Office, said: “This company had a meteoric rise, spending millions on properties that were supposed to house the most vulnerable in society and provide returns for investors.
“Its chaotic downfall has left many with unanswered questions. Today we conducted a major operation to advance our inquiries into suspected bribery and fraud.”
REITs offer regular income through dividends and are seen as tax-efficient as they typically distribute most of their taxable income to shareholders.
REIT investments are also seen as a way to diversify an investment portfolio as investors can buy shares in a REIT via a stock exchange, making them easily tradable.
The SFO was supported by Operation Henhouse, a National Economic Crime Centre initiative managed in partnership with City of London Police’s Lead Force Operations Room to provide funding to allow forces to undertake additional activity against fraudsters.