Residential Leasehold Reform Update
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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). 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), 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
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