Abolition of multiple dwellings relief pushes Grainger into the red
Grainger boosted its rental income by 11% over the six months to the end of March 2024 to £53.2m but was forced to take an almost £60m hit to its bottom line following the abolition of the multiple dwellings tax relief.
The group, which is on track to complete its conversion to a REIT in October 2025, said a £58.8m impact from the removal of the relief had pushed it to record a pretax loss of £31.2m, compared with a £5.7m profit in H1 2023.
Multiple dwellings relief was abolished in the Spring Budget.
Grainger boosted its rental income by 11% over the six months to the end of March 2024 to £53.2m but was forced to take an almost £60m hit to its bottom line following the abolition of the multiple dwellings tax relief.
The group, which is on track to complete its conversion to a REIT in October 2025, said a £58.8m impact from the removal of the relief had pushed it to record a pretax loss of £31.2m, compared with a £5.7m profit in H1 2023.
Multiple dwellings relief was abolished in the Spring Budget.
Despite the fall into the red, the landlord recorded strong growth in net rental growth and remained confident of further growth as it continued to build out its development portfolio.
It said its £500m committed pipeline, plus recently completed schemes would deliver a further £41m of additional net rental income growth, with opportunities from its £1bn secured and planning and legals pipeline delivering further growth.
Grainger plans to deliver 1,000 rental homes this year in its existing cluster locations of Birmingham, Bristol and north London, including 307 homes at the Copper Works in Cardiff.
Occupancy across the portfolio remained high at 97.7%, while the valuation dipped slightly by 1.9% to £3.7bn.
Chief executive Helen Gordon said: “Grainger has delivered another strong operating performance over the past six months. Despite some further yield expansion, strong rental growth has offset this with underlying property values broadly flat, demonstrating the performance of our platform and resilience of our asset class.
“Our sector’s positive market fundamentals and our strategic positioning mean that we expect rental growth to remain above the historical long-term average for the remainder of this year with scope for it to continue at elevated levels into 2025.”
Looking ahead, she added: “The outlook for Grainger is excellent. In light of the upcoming general election later this year, our extensive dialogue with all main political parties provides us significant comfort that the risk of regulation to our responsible business model is minimal.
“Our strong balance sheet with long-term fixed debt costs, our successful accelerated disposals programme to fund our continued growth, and a fragmented but maturing BTR market is resulting in an exciting time in the market with a growing number of potential opportunities that we are seeing.”
