REG - Ground Rents Inc Fnd - Residential Leasehold Reform Update

Ground Rents Income FundAnnouncement

31/05/2024 07:00

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RNS Number : 5499Q  Ground Rents Income Fund PLC  31 May 2024

Ground Rents Income Fund plc

RESIDENTIAL LEASEHOLD REFORM UPDATE

Ground Rents Income Fund plc (the 'Company') notes the enactment of the
Leasehold and Freehold Reform Act 2024 (the 'Act') on 24 May 2024.  The Act
forms part of the Government's residential leasehold reform agenda, launched
in 2017, and was the final piece of relevant legislation passed by Parliament
ahead of the General Election on 4 July 2024.

The Act follows the Government's consultation (the 'Consultation') in November
2023 seeking views on restricting the level of existing residential ground
rent that leaseholders pay in England and Wales, which included the
Government's stated intention not to pay compensation to freeholders.  This
Consultation represented a significant shift in the Government's approach to
leasehold reform and led to a pause in market activity and negatively impacted
values. The Company subsequently worked with industry peers and advisers to
prepare a comprehensive response to this Consultation that was submitted in
line with the Consultation timetable on 17 January 2024.

Following submissions to the Consultation by industry and others, to which the
Government is yet to respond, the Act does not impose restrictions on ground
rent payable under existing residential leases.  Consequently, leaseholders
must continue to pay ground rent in accordance with their lease terms.

Although this represents a better outcome for the Company than contemplated in
the Consultation, the Act contains provisions that are relevant to the
Company, including:

·      Making it easier and cheaper for leaseholders to buy out their
ground rent, extend their lease or acquire their freehold, a process known as
'enfranchisement'

·      Improving transparency over service charge and insurance costs
for leaseholders

·      Making it easier and cheaper for leaseholders to assume
management of their building

The majority of the Act, including the key provisions outlined above, will
only come into force once the Secretary of State passes additional secondary
legislation. Uncertainty therefore remains about how and when the legislation
will come into force, as well as whether any future Government will continue
to advance residential leasehold reform in whole, or in part or at all.

The Company and its external advisers are working to better understand the
detail of the new legislation and its potential impact on the portfolio.  As
previously communicated to investors, the Company has a clear strategy to
address the headwinds arising from leasehold reform and building safety,
whilst demonstrating best-in-class residential asset management.  Against
this challenging backdrop, the Company, alongside other institutional owners,
continues to advocate 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.

Due to this ongoing work, Companies House and The International Stock Exchange
Authority Limited have approved a further extension to the Company's 30
September 2023 accounts filing date to 30 September 2024.  The Company does
however expect to issue its accounts before 30 June 2024, and hold a separate
Extraordinary General Meeting in advance of 30 September 2024, at which the
Accounts will be presented to shareholders and shareholder resolutions
relating to the Accounts will be proposed.

For further information: 

 Schroder Real Estate Investment Management Limited         020 7658 6000

 Nick Montgomery / Chris Leek / Matthew Riley
 Singer Capital Markets (Broker)                            020 7496 3000

 James Maxwell / Alaina Wong
 Appleby Securities (Channel Islands) Limited (Sponsor)     01534 888 777

 Michael Davies
 FTI Consulting                                             020 3727 1000

 Richard Gotla / Dido Laurimore / Oliver Parsons

 

Notes to editors:

Ground Rents Income Fund plc (the 'Company') is a closed-ended real estate
investment trust ('REIT'), listed on The International Stock Exchange ('TISE')
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
reform 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.

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

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