Ground Rents Income Share Discussion Threads

[bitgold] 26/10/2024 08:12

Yes, that's my thinking too. Everyone hates it, so I'm sensing there could be some value here to pick over.

[calton1] 26/10/2024 07:40

Think there seems to be such little interest in GRIO that share price probably hugely undervalues it.

[bitgold] 25/10/2024 17:55

Maybe someone can explain the EGM more clearly, but it looks like an attempt is being made to try to sell the freeholds to leaseholders for as good a price as possible. should be in mutual best interests in many cases, so hope it goes well.

if they achieve it, what kind of realistic NAV per share are we looking at here?

[elbrus55] 18/7/2024 17:20

Looking to the future if you mean mean beyond 1 year..,.the valuation that the manager places on these assets is not that important. The share price strongly indicates that most people are not placing a lot of weight on it.The important thing will be the cash flows over the next 10 years. The rental income is fairly reliable but some of the other outgoings are 'materially uncertain'.

[calton1] 18/7/2024 08:58

Looking to the future the key question is whether the market has got GRIO's extent & valuation of commercial + institutionally (eg charity housing association etc.)held leaseholds correct. Has anyone got a handle on this in terms of SP? Sadly we can largely forget the private residential element.

[spectoacc] 18/7/2024 05:47

Indeed, but this is Labour.

My guess is, all future will be Commonhold, and they'll do the previous Tory plans on existing leasehold.

Either way, GRIO has been uninvestable for many years IMO (not hindsight - do a search).

[elbrus55] 17/7/2024 16:20

The quote is ambiguous about whether any reform applies to future home purchases (which is easy to enact) or historical arrangements (which is very difficult).

[spectoacc] 17/7/2024 15:39

Commonhold makes far more sense:


"Leasehold and Commonhold Reform Bill
This draft bill goes further than the Tories’ Leasehold and Freehold Reform Act, which was passed earlier this year. It will abolish the system of leasehold and replace it with a commonhold system — where those that live in a property each own a share of the freehold.

Analysis: In opposition Labour was critical of the government for not going far enough in leasehold reform. However, this is just a draft bill and is unlikely to be an immediate priority."

[elbrus55] 17/6/2024 10:14

If I understand correctly the Westminster estates didn't used to make money from lease charges (usually peppercorn) but rather when they gave permission to the council to change social housing into luxury flats. They could do this because the leases stipulated they should be used only for the working classes - so they argued they could charge a big premium to change the conditions. They lost this argument in court. It is not relevant to GRIO.The loss of contractual rental income has always been compensated at open market value since the 1967 law hasn't it? That law is still in force.

[spectoacc] 01/6/2024 16:35

Not if they get to buy them for peanuts.

[cousinit] 31/5/2024 08:34

My post 219 tried to outline how things looked a few months ago.

Seems that there have been a few changes.

Marriage value seems to have gone, but not sure that's significant for GRIO as leases tend to be very long rather than near the 80 year point.

The commercial element has been upped to 50% from 25% so that probably brings more assets in scope for GRIO. My estimate of what is out of scope is about the same as the debt, so protects Santander but not the residual for shareholders.

The £250 cap has gone but Labour must surely bring this (or similar) back on to the table. The market is likely to still be dysfunctional for that reason.

Like Specto says, the current changes may be enough to create demand for lease extensions, but I suspect most will wait for Labour to plant their flag first.

[calton1] 31/5/2024 07:44

Sadly elbruss55 is not correct. When Leashold Reform Act was passed in 1970s the Westminster Estates lost big time. This act allowed long term lessees to enfranchise freeholds in houses (but not flats) for absolute peanuts. Their application to Strasburg under European Convention (the predecessor of current Human Rights laws) was unsuccessful. I fear any application under the latest Act would meet a similar end.
But could any of our well informed readers please give me some simple details of what GRIO owns - surely it is not just ground rents on English flats? Sadly when bought shares in GRIO I was lead to believe it was mainly in the commercial sector.

[elbrus55] 30/5/2024 19:33

Yes.the Leasehold and Reform Bill 2024 has become law.Any £250 lease.cap,.obviously doesnt become law. No law that confiscates private property rights without compensation has ever been enacted in the UK since WW2 and if the UK parliament attempted to enact such a law then it would be invalid under international law. {Most of those international laws having being set up originally by the British). The politicians can vote for it all they like, but it won't get through process.

[sikhthetech] 24/5/2024 10:42

Will the Leasehold and Freehold reform bill become law today?.

Will ground rents be capped at £250?

[elbrus55] 01/5/2024 17:11

Interesting comment.I reiterate my earlier comment:The UK government can pass any laws it likes.However, in the end the decision of the government is irrelevant because they are subject to human rights law and international law. The decision will be made by the UK courts who act independently of the UK government.The human rights law has been copied into uk law to make things simpler.I thoroughly recommend you ignore my opinion and read the law, but there is still an international law behind it. At no point since 1947 has any person been deprived of UK property rights by UK legislation without compensation and the UK parliament does not have authority to do so. The stupid thing is that the international law which protects such rights was actually created by the British after WW2.The international law is only about 30 words in length. Do READ IT! Somebody critised my 'opinion' earlier without bothering to read those 30 words of international law.Most of these assets are owned by regulated insurance companies or related companies. The Bank of England / FCA will strongly defend the interests of these asset owners and the the underlying policyholders or members of pension funds. Note that the Bank of England have provided their regulated investors in these assets with Matching Adjustment (too complicated to explain here.)

[cousinit] 01/5/2024 10:32

I suspect that the govt will find ways of presenting any 'loss' as being limited, either through the time horizon or that monies paid in 125 years' time are worth the same as if they were paid annually in the interim.

The issue here is (and I'm not a fan of interference by any means) is that the govt can effectively blight the sector while any legislation is in consultation/process and threaten that any alternative Labour proposals will likely be more punitive.

There have clearly been a number of bad actors in the sector which has brought the increased levels of scrutiny.

[eddy_cochran] 29/4/2024 23:13

Gambling on random opinion ?

[elbrus55] 29/4/2024 08:21

I bought a little bit.There's some quite aggressive proposals in the leasehold reform consultation but I take comfort that the government doesn't have the competence or legal authority to do the more aggressive ones. A lot of it just talk but won't go anywhere. The less onerous one seem reflected in the share price already.The Human Rights Act Article 1 of the First Protocol does not give parliament the authority to deprive people of property unless it is in the public interest and even then compensation must be paid.The idea that it is against the public interest for one flat leaseholder to pay a mere 300 pounds a year in ground rent to another person according to a private contract which they both signed is not really credible.

[spectoacc] 24/4/2024 05:53

Do you rate the alternatives tho? Labour have the right mood music, but as far as I can see there's nothing between the ears. Reeves is lamentable, Sir Keir is from Corbyn era, and whilst I'm fond of Wes Streeting for not avoiding a fight, I can't see him lasting the first NHS strike.

We digress, but what Labour do is going to be key to a lot of investments - infrastructure, PFI, house builders, GRIO, utilities etc. Unconvinced much of it is priced in yet.


Edit - 7 minutes after posting, an RNS. I'll let someone who holds analyse it.

[dandigirl] 23/4/2024 16:11

There isn't an issue that Gove can't make worse. Sooner the better he is gone.

[spectoacc] 23/4/2024 14:42

Can't decide if he's best of a bad bunch, hardworking and a details man (cladding; ground rents; CAP), or if he's fairly useless (cladding; ground rents; CAP).

[cousinit] 23/4/2024 14:36

The pension funds are probably somewhat binary. Most have none some have loads. Rothesay Life (I think) is in the latter camp.

I would say that Gove always seems to be two faced, but I think he actually has more than Ronnie Barker... Can't seem to stop himself from indulging in political chicanery rather than concentrating fully on the day job (where he clearly has built up a number of seemingly unlikely advocates)

[spectoacc] 23/4/2024 12:37

I know there's talk of a £15bn hit to pension funds from it, but still tiny in the context of total assets - a kick it down the road arrangement probably works for them.

That doesn't leave GRIO in a good place though.

Michael Gove - the best leader Labour never had.