The City watchdog has dropped its investigation into Home REIT, two years after opening a probe into the stricken property firm.
The Financial Conduct Authority (FCA) has said it intends to take no further action against the firm, according to a statement released by Home REIT on Wednesday.
An investigation into the former London-listed social housing company was launched by the FCA in 2024, after the firm became involved in a series of major scandals, including some of its biggest tenants going bust. Home REIT was also repeatedly forced to offload chunks of its portfolio in attempts to raise cash and pay off debts.
The regulator’s probe covered a period from 22 September 2020 to 3 January 2023.
“Following our extensive cooperation with the FCA’s investigation, we are pleased to announce that it has closed its investigation and intends to take no further action against the company,” said Michael O’Donnell chairman of Home REIT.
The FCA was contacted for comment.
Home REIT controversy
Home REIT, which floated in 2020, was hit by a damning report from short-seller Viceroy Research at the end of 2022 which sounded the alarm on the make-up of its tenant base and their shaky finances.
The firm’s shares were suspended after the company failed to publish its annual accounts in the wake of Viceroy’s allegations.
Home REIT raised more than £850m from investors in its first three years, telling shareholders their capital would be used to acquire accommodation for vulnerable and homeless people while also generating returns from rental income, but it was found that some properties were being marketed to students and holiday makers.
Shareholder claims
Over 800 shareholders hit the company with a claim for losses they allege were caused by misleading statements and omissions of key details about the company, its business model and property portfolio earlier this month.
The investors allege the housing firm painted a misleading picture on the security of its rental income, tenant experience and valuation of its portfolio, all of which they say was “fundamental” in their decision to invest.
Nate Barber, partner at Harcus Parker and lead lawyer for the Home REIT Claimant Group, said: “We note Home REIT’s statement that the FCA has closed its investigation, but the statement gives no reason for that decision. We understand the separate SFO investigation remains ongoing.
“Home REIT was presented to investors as offering financial returns while helping to tackle homelessness. Our case is that what investors were told did not reflect the reality.
“Today’s announcement makes it all the more important that the High Court proceedings establish what happened, secure accountability for our clients and ensure this does not happen again.”
The UK’s top financial crime unit also unveiled a major probe into its past management earlier this year, after identifying as much as £300m in suspected fraud and bribery. The Serious Fraud Office conducted a series of raids and arrests in January, searching properties in Maidenhead, Altrincham and London.