Schroders’ Ground Rents Income Fund has seen its value fall thanks to leasehold reform and the long-running legal wrangle over Beetham Tower.
And it warned the long-term impact of the leasehold reform bill, due to be enacted this year, would see values tumble further.
In the fund’s half-year results, new chair Barry Gilbertson said the reform was “facilitating a one-time transfer of wealth from freeholders with legitimate property interests to leaseholders”.
Added to that, the building safety reform bill was likely to add to costs due to the “dramatically increased” workload.
The fund’s NAV fell by 1.1% to £101.4m, after £2.9m was set aside to cover the costs of remedial works at the Manchester tower.
The portfolio consists of around 19,000 flats across 400 assets, valued at £123.6m and producing an annual rent of £4.93m.
Fund manager James Agar said: “We are operating in a complex regulatory environment, which has increased the company’s running costs and reduced non-ground rent income.”
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