Ground Rents Income portfolio plunges on leasehold consultation

Ground Rents Income Fund has seen the value of its portfolio drop by a quarter, pinning the fall on a government consultation into limiting the ground rent paid by residential leaseholders in England and Wales. The REIT, which invests in long-dated ground rents and is managed by Schroder Real Estate Investment Management, said in a stock market update that Savills had valued its portfolio at £81.5m as of the end of March. That marks a fall of £26.5m, or 24.6%, from a year ago. The company said 97% of the portfolio valuation is subject to an industry-wide material valuation uncertainty clause related to leasehold and building safety reforms. A consultation that could lead to restrictions on ground rent is “a significant shift in the government’s approach to leasehold reform and has led to a pause in market activity and negatively impacted values”, the REIT said, adding: “The potential outcome of legislative change following the government consultation remains uncertain, and the company will continue to keep shareholders advised of material developments.” More disposals will be attempted, the company said, although market uncertainty means there can be non guarantee that sales will be achieved. Photo by Lorenzo Cafaro/Pixabay