Lawsuits, fraud claims and Greater Manchester’s links to a billion-pound property scandal
Our supported housing investigation identifies a curious jump in value for a property in Oldham
Dear Millers — the disturbing images that emerged from Manchester Airport yesterday of a police officer stamping on a man’s head are making news across the country. It’s a major story not just for GMP but also for Andy Burnham, whose role involves oversight of the police, and it has implications for how the authorities are perceived in the South Asian community. We’ve got the latest below.
Our main story today is about a property scandal in the City of London that has resulted in a string of lawsuits and is the subject of investigations by the Financial Conduct Authority and the Serious Fraud Office. Regular readers of the financial process might recognise the name of the property fund at the heart of it: Home REIT. What’s that got to do with Greater Manchester? Well, quite a lot, it turns out.
Our ongoing investigation into the supported housing sector has revealed that HSPG, a company paid millions of pounds by Manchester City Council to provide homeless accommodation, was a significant part of the Home REIT story, making large sums of money by selling properties to the fund (there is no suggestion HSPG broke the law). One striking example is a property we’ve identified in Oldham which was bought and sold for a very quick profit in 2021.
Our tale today — which is members only — involves the intersection of high finance and shabby properties that you may pass on your daily commute. And if that’s not enough for you, it also involves a donation to the leadership campaign of Liz Truss…
If you’re not a member yet and you want to read today’s story — or last week’s one about the curious sale of a £1.8m semi-detached property in Harpurhey — then please join up now. We can only do this journalism because of the income we get from our 3,000+ paying members.
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Your Mill briefing
👮 Greater Manchester Police faces a mounting crisis after alarming footage began spreading on social media yesterday of a police officer at Manchester Airport kicking and stamping on the head of a man who was lying on the ground. Video shows the officer violently assaulting the man, called Fahir, and later kicking and arresting another man named Amaad. The two men from Rochdale are planning on filing a complaint against the force. GMP says that officers were called to Terminal 2’s car park following reports of an assault. Once on the scene, three officers were allegedly assaulted, with one female officer suffering a broken nose. Four men were arrested for assault of emergency workers and affray. The officer in the video has been suspended from all duties and the case has been referred to the Independent Office for Police Conduct.
📽️ The video has led to a media firestorm, with the story prominent on last night’s BBC News at 10. Former Metropolitan Police chief superintendent Dal Babu told Radio 4’s Today programme this morning that he thought racism played a “significant part” in the incident. Nazir Afzal, former chief prosecutor in the North West and now chancellor of the University of Manchester, tweeted: “Obviously don’t have the whole picture but I see no justification for the kick in the head, followed by a stamp & a taser on a prone, unarmed man with his hands by his side.” There were protests outside Rochdale police station yesterday evening, where the town’s South Asian community in particular wants to see accountability. Further protests are expected outside the mayor’s office later today, and the GMCA has cancelled a media reception scheduled for this evening.
🚨 In a statement, Andy Burnham, who is ultimately responsible for policing in Greater Manchester, said “I’ve seen the disturbing video footage circulating of a GMP officer at Manchester Airport and recognise the widespread and deep concern this has caused in Greater Manchester and beyond. The Deputy Mayor and I have raised these concerns with the Deputy Chief Constable.” On BBC Radio Manchester this morning, Burnham told host Mike Sweeney he wasn’t in a position to condemn what the footage showed. “When you say ‘condemn’, that would be me saying ‘I’ve looked at everything now, and I’m sitting in judgement on this’, and it's not my job to do that.”
🧾 In a GMCA scrutiny committee yesterday, Lib Dem councillor Shaun Ennis requested that the committee receive the findings of the GMCA’s investigation into the mayor’s night time economy advisor Sacha Lord. The investigation was sparked by our story about a misleading Arts Council application filed by Lord’s company, Primary Event Solutions, and is ongoing. Ennis told the committee: “The report should include details on the process of appointing advisors to the mayor, procedures, codes of practice and governance, including oversight of the minutes of meetings between the mayor and his special advisors.”
👪 Four Greater Manchester MPs, representing constituencies that rank in the 50 poorest in the country, voted against an amendment to scrap the two-child benefit cap. The cap, which prevents families from receiving benefits for more than two children, is criticised for contributing to child poverty, with 1.6 million children affected nationwide. Local MPs who voted against the amendment — i.e. voted to keep the cap in place, in line with Labour’s position — include Manchester Central MP Lucy Powell, Blackley and Middleton South’s Graham Stringer, Manchester Rusholme’s Afzal Khan and Gorton and Denton’s Andrew Gwynne.
🌹 Andy Burnham, who supports the scrapping of the cap, told Newsnight: “I see the evidence of the harm it does in Greater Manchester, we have 5,000 homeless families, 6,500 kids in temporary accommodation. The evidence is plain that it really does great harm,” he said. However, he defended the government’s position. “The emphasis should be on unity, and giving the government that space to bring forward their thinking.” Seven rebel MPs didn’t have unity on their mind when they voted to scrap the cap, and subsequently had the whip removed. Among them was Salford MP Rebecca Long-Bailey. We recently looked at what parts of Greater Manchester are most affected by the two-child benefit cap, read that here.
Bitter lawsuits, a crashed stock market fund and Greater Manchester’s links to a billion-pound property scandal
By Joshi Herrmann
It’s a scandal that has shaken the City of London and is now the subject of a string of lawsuits and an investigation by the financial regulator.
The property fund Home REIT (which stands for Real Estate Investment Trust) was supposed to be a “landlord for the homeless”, a clever way to divert profit-seeking private investment into solving one of the country’s most pressing social issues. The plan was to raise cash from investors to buy up properties which would then be let out to charities and similar support providers. In the end, Home REIT spent nearly £1 billion buying roughly 2,500 properties with 12,000 bed spaces that these organisations were supposed to fill with vulnerable tenants.
“Investors bought shares in Home REIT based on its claims that it had stringent processes to ensure it acquired properties that would provide safe and secure accommodation for vulnerable residents and would generate robust, sustainable returns,” Jennifer Morrissey, the lawyer leading an ongoing lawsuit on behalf of the investors said earlier this year. “It is now evident, from all the facts widely reported in the press, that Home REIT did nothing of the sort.”
The first major trouble emerged in late 2022, two years after Home REIT arrived on the London Stock Exchange, when the fund came under attack from “short sellers” — investors betting against its stock. The most notable short was Viceroy, who released a scathing report suggesting that Home REIT had overpaid for many of its properties and was not receiving anywhere near the rent it expected to earn from some of the tenant charities and non-profit support providers.
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“We strongly believe that these are not the people who should be entrusted to look after the vulnerable, nor should they be entrusted with your taxes to do so,” the Viceroy report said. “This industry is nascent, subject to limited oversight, and has begun breeding a plethora of for-profit vultures who have limited ability to actually run a charity or social enterprise.”
Not long after, Home REIT “admitted that its properties were worth only a fraction of what it originally had paid for them,” as The Times puts it. The fund’s portfolio of 2,473 properties was valued by an independent firm at around £413 million, quite some drop from the £977 million Home REIT had paid. As you might expect, Home REIT’s share price collapsed, falling around 60% in late 2022. In early 2023, shares in the fund were suspended, as they are to this day.
In its report, Viceroy noted that “Scrutiny in these industries should be encouraged.” And, for almost a year now, reporters at The Mill and our sister titles have been trying to do just that: scrutinise how local authorities and companies in our areas got entangled in the Home REIT scandal.
Last week, we reported on the bizarre story of a semi-detached home in Harpurhey that was bought for £575,000 and then flipped for £1.8 million on the same day, a transaction reported to MPs by the council as an example of market “manipulation”. We also revealed that the company behind the flip was HSPG, one of the council’s most significant partners in providing homeless accommodation and the recipient of millions of pounds of public money. In that case, we don’t think it was Home REIT who bought 1 Beech Mount from HSPG but Home Long Income Fund, a similar fund created by the same investment advisors, which is also in financial trouble.
But if we take a short drive north from Harpurhey into Oldham, we find a property that was bought by Home REIT — and which was flipped by HSPG, again for a very impressive profit.
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