REG - Ground Rents Inc Fnd - Residential Leasehold Reform Update

Ground Rents Income FundAnnouncement

27/01/2026 17:30

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RNS Number : 6093Q  Ground Rents Income Fund PLC  27 January 2026

Ground Rents Income Fund plc ('GRIO', or the 'Company')

 

RESIDENTIAL LEASEHOLD REFORM UPDATE

 

Ground Rents Income Fund plc notes the publication earlier today of the draft
Commonhold and Leasehold Reform Bill (the 'Bill'), which proposes to cap
ground rents on most long residential leases in England and Wales at £250 per
year, reducing to a peppercorn (nil value) after 40 years. The cap would only
take effect once the Bill becomes law and the relevant provisions come into
force, which is not expected before late 2028.

 

GRIO reiterates the position set out in its response to the Government's 2023
consultation Modern leasehold: restricting ground rent for existing leases
(available on the Company's website: https://tinyurl.com/yc36sk6u
(https://tinyurl.com/yc36sk6u) ). The Company believes the proposed reforms
could have serious unintended consequences for leaseholders, including
heightened freeholder insolvency risk and disruption of building safety
oversight. GRIO continues to believe that any reform must fairly balance the
interests of responsible freeholders and leaseholders, while maintaining the
legal and economic integrity of the housing market. It continues to support
the 'three‑stage proportionality test' described in its consultation
response - a targeted, evidence‑based approach to address ground rents that
may be deemed onerous while upholding lawful contracts and investor confidence
in the UK.

 

The mean and median residential ground rents across the Company's portfolio
are £257 and £250 per year respectively (excluding student assets, which sit
outside the scope of a cap as they are subject to commercial headleases of
whole). An initial high-level assessment indicates that, on a like-for-like
basis (net of disposals), the cap could reduce portfolio ground rent income by
approximately 26% to £3.8 million compared with 30 September 2025. Based on
the latest indicative guidance from the Company's independent valuer, Savills,
applying a benchmark multiple of nine Years Purchase to residential ground
rent income implies a potential reduction in portfolio value of approximately
44% to £31.0 million. This would in turn suggest a Net Asset Value ('NAV') of
approximately £27.4 million, or 28.6 pence per share ('pps'), compared with
£52.2 million, or 54.5 pps, as at 30 September 2025. These figures are
provided for illustrative purposes only and do not take into account any
potential upside from increased legislative certainty, the delay in the
relevant provisions coming into force or other factors.

 

Together with its advisers, the Company is reviewing the detail of the Bill.
The Government has stated 'the ground rent cap could come into force in late
2028', albeit this will be subject to parliamentary timings and any relevant
legal challenge. As with previous leasehold reform measures, many of the new
legislation's provisions are also expected to only come into force following
the introduction of additional secondary legislation. The Company will provide
a further update in due course.

 

As previously outlined in the Company's audited results for the year ended 30
September 2025, issued in December 2025 (available on the Company's website:
https://schro.link/grioar25 (https://schro.link/grioar25) ), GRIO is a party
to a Judicial Review challenging enfranchisement provisions within the
Leasehold and Freehold Reform Act 2024. That claim was dismissed by the
High Court in October 2025, and a decision on permission to appeal
is expected in early 2026.

 

This announcement contains inside information for the purposes of the UK
version of the Market Abuse Regulation ('MAR') which forms part of UK law by
virtue of the European Union (Withdrawal) Act 2018; as amended. Upon
publication of this announcement, the inside information is now considered to
be in the public domain for the purposes of MAR.

 

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Enquiries:

 

Schroder Real Estate Investment Management Limited

Chris Leek

020 7658 6000

 

Singer Capital Markets (Financial Adviser & Broker)

James Maxwell (Investment Banking)

Sam Greatrex (Sales)

020 7496 3000

 

Appleby Securities (Channel Islands) Limited (Sponsor)

Andrew Weaver / Michael Davies

01534 888 777

 

FTI Consulting

Richard Gotla / Oliver Parsons

0203 727 1000

 

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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.

 

Please see the Company's website for more information:
www.groundrentsincomefund.com (http://www.groundrentsincomefund.com)

 

 

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