The Ground Rents Income Fund plc has fallen in value by as much as £6 million since March owing to “recent media attention” on the ground rents scandal (see report below).
The £124 million fund almost certainly fell further on the announcement of Sajid Javid, Communities Secretary, earlier this week that he was going to ban leasehold houses and reduce ground rents to “as low as zero”.
Over the past three years, shareholders in the Ground Rents Income Fund plc have received returns of 40.6 per cent.
It interim report says the “of company’s wider portfolio of doubling ground rents, which represents 18 per cent of the portfolio capital value, the directors believe that the valuation may now be lower, based on recent market sentiment, by approximately £5.5 to £6 million.”
It continued: “ground rents and landlords have attracted media attention in recent months regarding perpetual 10-year doubling ground rents and new-build leasehold houses.
“As a consequence, some institutional buyers have withdrawn from bidding from any form of doubling ground rent assets and pricing has weakened accordingly.”
The Ground Rents Income Fund plc features in the article of David Byers in his Times article today.
‘Builders must pay to fix rip-off leaseholds’
Builders accused of mis-selling new homes are braced for legal claims worth millions of pounds after locking buyers into leases with spiralling ground rent charges. Sajid Javid, the communities secretary, this week announced plans to ban homebuilders from selling new houses on a leasehold basis.
It included a comment from from Monica Tapes, of Cantor Fitzgerald, saying that Sajid Javid’s crackdown might make existing freeholds more valuable.
Full marks for corporate flag waving and getting the company name in The Times, but the kind of scrutiny that these dubious incomes streams are now likely to receive is more likely to depress values further.
LKP is braced for a PR pushback saying pensions are endangered if ground rents are reformed.
It is unlikely an enterprising PR will attempt to defend the interests of the anonymous investors who hold these assets offshore.
The Times article also references Adriatic Land, HomeGround, William Waldorf Astor, David Cameron’s brother-in-law, and Winchester-based E&J Capital Partners as ground rent investors.
James Tuttiett and E&J Capital Partners featured in an in-depth Guardian article today:
Leasehold tycoon: man whose firms control 40,000 UK homes
He does not appear on any rich list but he has built a property empire that rivals that of the Duke of Westminster. Companies controlled by James Tuttiett, aged 53, have quietly snapped up the freeholds of tens of thousands of houses and flats in almost every city in Britain, which are now at the centre of controversy over spiralling ground rents.
GroundRentsIncomeFundplcLatestReport
Related posts:
Ground Rents Income Fund plc offers help to leaseholders … in order to keep this grisly show on the road
Daily Mail says blue chips are cashing in on ‘rip-off ground rents’
Ground Rents Income Fund plc says it wants to be a ‘socially responsible landlord’. How about: socially responsible ex-landlord?
Countryside Properties plc cracks over ground rents scandal …
‘Fright night’ for Taylor Wimpey as profits fall 24% over leasehold scandal, says Times
Housebuilders and stooge conveyancing solicitors face legal action, reports The Times
Oooops! I know of a ‘Freehold Portfolio Merchant’ who ain’t gonna be happy.,,, It will be gratifying to see the collapse of his bottom feeding empire.., Oh dear his attack ‘dog’ / ‘Bitch’ ( please note that BITCH is the correct terminology for a female dog) will have to sign on the dole cause she sure ain’t gonna become an academic or concert pianist…do they have a welfare state in Holland? Just thinking out loud folks.. Ha ha ha.
Dear LKP/APPG and fellow leaseholders
It might be of interest to note that according to the GRIF Plc’s Investment Manager’s Report the company does not have an exposure to perpetual 10-year doubling ground rent (in the new build housing market) but ‘its wider portfolio of doubling ground rents (18% of the portfolio capital value) may now be worth approximately £5.5 to £6.0 million less that as at 31 March 2017’. I assume the wider portfolio means flats (old and new) and older leasehold houses.
GRIF was sitting on investment property assets (with ground rents) of £143 million at 31 March 2017; up from £126 million at the end of the year 30 Sept 2016 and is on target to hit a revenue figure of £5 million in 2016/17 compared to £4.8 million in 2015/16.
What is driving GRIF’s interest in ground rent investment properties? Their Investment Manager’s Report provides the answer to that question:
(1) Institutional money and smaller new entrants; and
(2) the urban development of apartments which are expected over the next five years to create ground rent investment opportunities worth £400 million per annum.
GRIF plc are focused therefore primarily on the new build apartment market, and it is forecast to be worth £2 billion over the next five years! No wonder leasehold flats are popping up everywhere all over the country!
But why are investors so interested in this ‘alternative residential investment’ market as Savills called it back in 2014? Note 5 of GRIF’s interim report gives a clue:
a) Low interest rates.
Note 5 states: ‘While interest rates remain low, ground rents are an attractive investment due to their secure, pre-determined income streams.’
b) Regular ground rent reviews:
Note 5 states: ‘The most valuable ground rent assets are those which are RPI linked with reviews every 10 years or less.’
Note 5 continues; ‘The least attractive ground rents are those which are flat with no future rental increases …’
Therein lies the solution: outlaw ground rent and liberate leaseholders from being treated as second class citizens in their own country. A country for whom many of our ancestors have shed blood, sweat and tears as we have been reminded this week.
C’mon Parliament: Wake-up and act decisively and liberate leaseholders from the power of greed and deception. Fulfil the oath you swore to HM the Queen and fight without fear or favour for a fair, just and righteous society.
There you go. Hope those insights help.
Ps.
There is nothing like seeing the evidence for yourself, so the weblink to the Ground Rent Income Fund (GRIF) Plc’s interim accounts is:
http://www.groundrentsincomefund.com/latest-news/
The half year report was released on 22 June 2017. Enjoy!
Pps.
I mentioned this previously but for those who have not read that post, the Savills research report ‘Spotlight: Alternative Residential Investments’ (2014) gives a good insight why investors are ploughing their money into ‘the ground rent market’ and is well worth a read:
http://pdf.euro.savills.co.uk/residential—other/spotlight-alt.pdf
I have just come across another Savills Research Report entitled ‘Spotlight: Ground Rent’ (2012) which may also be of interest:
http://pdf.euro.savills.co.uk/uk/spotlight-on/spotlight-on-ground-rents—spring-2012.pdf
Just came across this re the Ground Rent Income Fund:
http://www.iii.co.uk/stockmarketwire/434095/grif-update-over-doubling-ground-rents
They say “We are committed to being a socially-responsible landlord, working hard to treat all leaseholders in a simple, honest and transparent manner.”
And, to be fair, from the stats in that announcement it doesn’t look on the face of it that they are in the top ‘fleecing residential leaseholders’ league by a long mile (the commercial leaseholders can presumably fend for themselves).