The businesses started by Grand Designs star Kevin McCloud that once seemed like bullet-proof investment prospects are now headed for liquidation. As a result, those who invested (some heavily) in HAB Land Finance are now facing the prospect of losing every penny.
Named after Mr. McCloud’s Happiness Architecture Beauty brand, HAB Land Finance attracted more than 280 investors and raised a collective £2.4 million at the time of its establishment. The company was founded as a property development project in Winchester and Oxford, but an announcement was made this week that the liquidators have been called in.
Investors had been promised healthy returns of up to 8%; instead, they now face the prospect of being wiped out entirely.
When the company was founded in 2017, Mr. McCloud advertised the investment prospect as having the potential to deliver “triple bottom line returns with progress on energy positivity.” Of the almost 300 investors that helped fund HAB Land Finance, none saw any return on their investment of any kind.
In August this year, a letter was issued to HAB Land Finance’s investors warning that they stand to lose up to 97% of the money they contributed to the venture.
“After final completion of the projects at both Kings Worthy and Cumnor Hill [in Oxford], the net return available to bondholders would be expected to range from £606,000 (the best case) to £69,000 (the worst case), which, in each case, is equivalent to 26 pence and 3 pence for every £1 of bond monies invested,” read an extract from the letter, a copy of which was obtained by the Guardian.
As a result of ongoing financial difficulties and a generally poor outlook, the firm’s board made the regrettable decision to call in the liquidators. One of them, James Bennett, attributed the company’s financial issues to unexpectedly high costs.
“The directors have reported that higher than anticipated design and project management costs, coupled with delays to the delivery of the sites, resulted in the companies experiencing significant liquidity issues,” said Mr. Bennett.
“This has resulted in a considerable loss to mini-bond holders, who largely financed the project,” he added.
Simon Bullock, director of HAB Land, said that the company had ‘no alternative’ than to call in the liquidators.
“With only 22% of the mini-bond holders voting for the resolution and having exhausted all other options, we were left with no alternative but to commence proceedings to put these companies into liquidation,” he said in a statement.
“With respect to the current HAB development sites in Oxfordshire and Winchester, none of the homeowners are directly impacted by this change, although the situation remains fluid and under review,” Mr. Bullock added.
“This has meant that there is, what we hope to be, a temporary pause on the remaining works on the sites.”
Local authorities have since lashed out at HAB Land, accusing the company of failing to deliver a series of promised facilities. According to Winchester City Council, the company promised to build a play area, an orchard, and allotments at Lovedon Fields, Kings Worthy, which have instead been replaced with an unfinished property development.
The story was first covered by the BBC, which reached out to Mr. McCloud directly for comment but has not yet received a reply from Mr. McCloud personally or his company.