The House Crowd

» see thehousecrowd.com as it lived, on the wayback machine

~ the eulogy ~

Frazer Fearnhead went on Dragons' Den and asked for a million pounds in exchange for five percent of his company. He left with nothing, which on that program is the normal outcome and not usually the interesting part. The House Crowd went on to raise 93 million pounds from the public anyway, and ended owing its investors 52.7 million of it.

The company was set up in December 2011 and started trading in March 2012 out of Manchester, with a product anybody could follow: put in a thousand pounds and own a slice of a buy-to-let house somewhere in the north of England, with the platform collecting the rent. By 2014 the Guardian reported it was buying roughly one property a week. By January 2019 it had funded 368 properties and raised more than 93 million pounds, with over 38 million paid back out in returns.

Then the product quietly changed shape. From 2016 the money went increasingly into property development loans instead of finished houses, which is a different risk wearing the same marketing. The FCA authorized the firm in January 2018 after years of operating on somebody else's license, and in March 2018 it launched an innovative finance ISA with a headline rate of 7 percent. One day in April 2018 it raised over 1.3 million pounds, 1.2 million of which went into a single mill conversion in Lees.

From 2019 the development loans began defaulting. By the end, every active one had. The firm had been under a voluntary requirement from the FCA since 2020, and in January 2021 the regulator said it would lift that requirement if the balance sheet was recapitalized. The money could not be found. On 24 February 2021 the directors appointed administrators from Quantuma. The FCA put out a notice two days later, and the sentence in it that mattered was that peer-to-peer lending is not covered by the compensation scheme.

None of this travels. A crowd platform for British buy-to-let needs a country where ordinary households treat housing as a savings product and where a spare thousand pounds is a normal thing to have, and I have never lived in one. The pitch is the familiar part, not the asset: a website with a minimum deposit on it and a running total on the front page that only climbs.

~ the dossier ~

~ the loan to the chief executive ~

The administrators' report at Companies House recorded a loan of about 390,000 pounds from the company to Fearnhead. They called it a breach of the firm's own credit policy and a matter they had to report to the regulator. Fearnhead's answer was that the board had known about the loan, which he said was made in 2019 under the credit policy then in force, and that 315,000 pounds of it had been repaid by February 2021. He also said two non-executive directors had been pushing for administration since December 2020, which they denied.

~ three years of administration ~

Quantuma's administration ran from February 2021 to February 2024, extended by the court every six months, and ended by moving the company into creditors' voluntary liquidation on 27 February 2024 with the same firm staying on to chase whatever was left. The ISA accounts had gone to ShareIn the month before.

The numbers from that stretch are the ones to keep. Investors received 97,408 pounds across the three years. The administrators' own time costs for the same period came to 1,127,797 pounds. The reason given for not returning the loaned sums was an environment of poor record keeping and documentation, which is the professional way of saying nobody could work out whose money had gone where.

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