Ground Rents Income Fund launches asset management plan

Real estate investment trust Ground Rents Income Fund announced on Monday it was considering options for certain ground rents held within its portfolio in light of concerns voiced by the government and its proposals to amend leasehold legislation.

Ground Rents said these concerns related to leasehold houses, which accounted for 11% of income generated in the company's portfolio, and the doubling of rents in those properties every 10 years, a practice the group said it does not take part in.

The firm said it would be spending the remainder of the year contacting its residential leaseholders with doubling rents, regardless of them being 10, 25, 33, 35 or 50 year cycles, to offer them an opportunity to convert their existing review mechanism to the lesser of inflation, as measured by the retail prices index (RPI) or doubling while retaining their existing review cycle.

While the board could not estimate the number of leaseholders likely to take up the offer to convert it said it had "reviewed a number of scenarios" that indicate the £5.5m to £6m net asset value (NAV) projected on 2 August would remain unchanged.

It did say that one off administrative costs for the exercise would be in the order of £200,000 before VAT.

As of 1420 BST, shares were steady, down just 0.80% to 123.01p.