A local council has lent £150m to The Hut Group’s billionaire founder following a raft of property transactions ahead of his company’s stock market flotation.

Warrington Council made available £151m of a £202m loan facility to an investment company called Icon 3 Holdco, which is indirectly controlled by THG chief executive Matthew Moulding, according to a council report from July.

The money helped with the construction of new properties for THG’s use and followed property transactions undertaken by companies controlled by Mr Moulding around the time THG launched its £5bn stock market listing last September, the Financial Times reported.

The loan, arranged by property firm CBRE, is secured against assets including various commercial properties, some that are currently being built, around Manchester airport. The terms of the agreement were not disclosed.

Many of THG’s freehold property assets have been transferred to companies controlled by Mr Moulding through Guernsey-domiciled Moulding Capital Ltd (MCL), a move that raised eyebrows at the time of the initial public offering. These companies now let the properties back to THG for annual rent of about £19m. THG and Mr Moulding defended the move at the time.

A large distribution warehouse in Warrington, known as Omega, was among those transferred to MCL before THG’s float.

The council defended the loan saying it was “not a new venture for Warrington and is a practice that has been evidenced as being well established for some time in local government across the UK”.

It added: “Our objective is to secure good quality jobs for local residents.”

Local councils funding – through loans – property development?


It’s bad enough when they do it on their own account, with equity. But investment banking by the guys hired to run the drains?

8 thoughts on “WTF?”

  1. Before the ’80s you could get a mortgage from your local council. When clearing out my grandma’s house I found an old financial advice booklet for first-home-buyers. In the 1990s it struck me as bizzaire.

  2. “the guys hired to run the drains”

    It’s worse than that. These are the guys in charge of the local council pensions. Unlike national government, local government pension schemes are mostly ‘funded’. There’s supposed to be a pot of money to pay the pensions. And at a time when every sane employer has backed away from funded defined benefit schemes, they are still the norm with local councils.

  3. Warrington Council has a long history of these sorts of financial deals, using money it doesn’t have to improve their services due to “cuts and evil Tory austerity”.

  4. “And at a time when every sane employer has backed away from funded defined benefit schemes, they are still the norm with local councils.”

    That’s because local councils know that there’s an inexhaustible piggy bank called ‘Council Tax Payers’ whom they can plunder at will.

  5. @jgh



    In the dying days of Brown’s government, there were serious proposals to bring local authority mortgages back into the mainstream.

    One option under consideration is to allow councils to borrow on capital markets, using their triple-A credit rating to raise finance more cheaply than banks can. Councils are currently prohibited from lending below the “standard national rate” of 5.07%, but restrictions may be lifted, enabling them to lend at rates they have negotiated in the money markets. …

    Local authorities became significant lenders in the 1960s, and during the 1973-1974 “mortgage famine” they played an important role in filling the gap left by building societies in an earlier credit crunch. They typically offered loans of up to 97% of the value of a home, with repayments spread over 25 or 30 years. Mortgages were granted to local people only and targeted areas councils were keen to see regenerated. …

    Several councils have been lobbying the government to lift restrictions imposed in the mid-1970s that in effect removed them as a force from the mortgage market. But Treasury officials have resisted council intervention in mortgages unless all other avenues of injecting liquidity into the property market are exhausted.

    Chris Leslie, of the New Local Government Network, a policy thinktank, said: “We have been trying to push this concept with government since September. The money could come from the same capital markets the banks use, but using the triple-A rating that local authorities enjoy.

    “One reform we are urging is a relaxation of the rules so that local authorities can set their rate of mortgage interest based on the price they have accessed in capital markets.”

    And from the other article:

    A decision by the Communities and Local Government department to cut the “standard national rate” at which councils are able to lend may pave the way for authorities to begin to plug the gap left by building societies and specialist lenders that have stopped lending. The standard national rate will be reduced from 5.07% to 3.93% from tomorrow. …

    Local authorities played a major role in the home loan market in the 1960s, mid-1970s and also the early 1980s until mortgage finance became more widely avail­able and their loans became less attractive. At one point, they had 16% of the mortgage market. …

    “Councils used to be in the mortgage business until the 1980s when this facility was wound down by the government, as it was then assumed that the private banks could cope,” said Chris Leslie, director of independent thinktank New Local Government Network, which has been lobbying for changes to the regime. “We now know that a diversity of mortgage provision is needed to prevent the current crisis.”

    The reduction in the standard national rate is regarded as essential to entice councils back into the mortgage arena.

    But the rules, as set out in the 1985 Housing Act, are complex. Local authorities are prohibited from lending below the standard national rate. Its level is set against the rates charged by building societies – which most recently have set rates ranging from 5.79% to 3.50% for existing borrowers.

    Campaigners hope that such restrictions could be lifted, enabling councils to lend at rates they have negotiated in the money markets.

    Leslie said: “While we still believe that councils should have complete freedom to judge for themselves the rate at which to offer mortgage loans to their residents, we welcome the encouragement from the government. Many people are suffering because of the turbulence of the housing market and through no fault of their own are unable to get mortgage or remortgage finance from the banks.

    “The private banking sector’s mistrust of one another means that it should fall to the public sector to ease liquidity and offer mortgage finance to the public. With the capital markets more willing to trust local authorities than the private banks, councils could prudently pass on cheaper mortgage capital to some of their residents.”

    Whereas lenders have increasingly demanded larger deposits from aspiring home owners, councils may be prepared to accept smaller down-payments, as they were in the 1970s, when loan-to-value ratios of 97% were common.

    Not sure much of that got off the ground. Think Ireland still has local authority mortgages. Lloyds TSB had an agreement with some councils for what it called the Local Authority Mortgage Scheme (LAMS), but the mortgage was actually with Lloyds not the council directly (effectively the council were just “lending a hand” in terms of the deposit, allowing approved residents who were first-time buyers to get a mortgage with just 5% deposit with the council guaranteeing the rest) but that scheme was dwarfed by national government’s Help To Buy and the Lloyds scheme seems to have ended pretty soon after it began. (Can’t find the end date, these things seem to have far more publicity on launch than on shutdown!)

  6. “ It’s bad enough when they do it on their own account, with equity”

    Actually it’s even worse when they’re doing it on their own account, because then the incompetents are involved in running it as well. At least when it’s a loan they only lose our money.

  7. Time for an end of local Govt and all their so called “services” to be privately supplied.

    If UK had 1000s of spare Forensic Accountants they could all have good careers by siccing them onto local Govt thieves. An entire generation would have 30-40 years of work unravelling how crooked local Govt really is. Esp roadworks.

  8. At the time of the sell-off of council houses tenants would go into the relevant Cambridge office to buy their houses. There were three modes: (i) hand over a plastic bag full of money, (ii) get a mortgage from the Halifax, (iii) get a mortgage from the council.

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