REG - Ground Rents Inc Fnd - Update on Government consultation

Ground Rents Income FundAnnouncement

20/11/2023 07:00

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RNS Number : 8796T  Ground Rents Income Fund PLC  20 November 2023

Ground Rents Income Fund plc (the 'Company')

Update on Government consultation on leasehold reform

On 9 November 2023, the UK Government published a consultation, 'Modern
leasehold: restricting ground rent for existing leases', seeking views on
limiting the level of residential ground rent that leaseholders pay in England
and Wales.  The consultation documents can be found at the following link:

https://www.gov.uk/government/consultations/modern-leasehold-restricting-ground-rent-for-existing-leases
(https://www.gov.uk/government/consultations/modern-leasehold-restricting-ground-rent-for-existing-leases)

The consultation represents a shift in the Government's approach to leasehold
reform, which had previously focussed on capping the treatment of ground rent
in the enfranchisement process.  As a result, the Company's independent
valuer, Savills, in discussion with other valuers and the Royal Institution of
Chartered Surveyors, has confirmed they are likely to adopt a Material
Valuation Uncertainty Clause ('MUC') for the whole portfolio until there is
greater certainty on the outcome of the consultation and its impact on the
ground rent market.  Savills have also confirmed the MUC will not be
retrospectively applied to the Company's independent valuation as at 30
September 2023.

If the MUC is applied to the Company's portfolio valuation as at 31 March
2024, this would extend the MUC scope beyond those properties already impacted
by building safety related defects, which represented approximately 16% of
portfolio value as at 31 March 2023.

Subject to the outcome of the consultation, the Government aims to introduce
reforms through the Leasehold and Freehold Reform Bill, which was announced
during the King's Speech on 7 November 2023.  The Company will respond to the
consultation, which closes on 21 December 2023, and summarise the response in
the forthcoming year end accounts to 30 September 2023, due to be released in
early 2024.

As noted in regular investor communications, the Company has a clear strategy
to address the headwinds arising from building safety and leasehold reform,
whilst demonstrating best-in-class residential asset management.  Against
this challenging operational backdrop, the Company has advocated for leasehold
reform that fairly balances the legitimate interests of responsible landlords
with the interests of leaseholders, whilst also delivering industry wide
improvements in terms of transparency, value for money and service levels.

 

Notes to editors:

Ground Rents Income Fund plc is a closed-ended real estate investment trust,
listed on The International Stock Exchange and traded on the SETSqx platform
of the London Stock Exchange.

Schroder Real Estate Investment Management Limited (the 'Manager') was
appointed as the Company's Alternative Investment Fund Manager in May 2019 to
support the Company's Board with the headwinds related to building safety and
leasehold reform.

During the first half of 2023 the Board and Manager carried out an extensive
shareholder consultation on proposals to change the Continuation Vote
mechanism included in the Articles dating from 2012, as well as proposed
changes to the Investment Policy.  These proposals received strong support
from shareholders and resulted in a new Continuation Resolution and Investment
Policy. The new Investment Policy adopts a strategy of realising the Company's
assets in a controlled, orderly and timely manner for shareholders, whilst
continuing to deliver best-in-class residential asset management including
fairness, transparency, and affordability for leaseholders.

See the Company's website for more information:

groundrentsincomefund.com
(https://www.schroders.com/en-gb/uk/individual/funds-and-strategies/investment-trusts/ground-rents-income-fund-plc/)

 

Enquiries:

 

Schroder Real Estate Investment Management Limited

Nick Montgomery / Matthew Riley / Chris Leek

020 7658 6000

 

FTI Consulting

Richard Gotla / Dido Laurimore

0203 727 1000 / Schroderrealestate@fticonsulting.com
(mailto:Schroderrealestate@fticonsulting.com)

 

Singer Capital Markets (Broker)

James Maxwell / Alaina Wong (Investment Banking)

Sam Greatrex (Sales)

020 7496 3000

 

Appleby Securities (Channel Islands) Limited (Sponsor)

Andrew Weaver / Michael Davies

01534 888 777

 

 

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