Log In

Subscribe

PrimeResi is the journal of luxury property; the leading news, insight & opinion resource for the UK’s prime residential sector.

Published online daily, and in print quarterly.

Required reading for: luxury developers, buying agents & property finders, high-end estate agents,real estate investors,  and anyone professionally involved in the luxury property sector.

Find out more about monthly, annual and corporate subscription packages here.
 

Search Tools

Search by Article Type

Search by Location

Search by Month


Search Everything

Translate

PrimeResi Directory

Who to know; who to recommend; who to call...
A directory of the prime movers at the top of the property market.

Featured Listings

Showing 1 - 7 of 436 results

Visit the main Directory page here

Appointments

The home of luxury property careers

Latest Opportunities

RSS ____________________________

  • Research Analyst
    Chestertons is recruiting for a Research Analyst who will report to the Head of Research and work with him on a number of different projects in the department. Full details and how to apply here
  • New Homes Manager
    This award-winning estate agency group has an exciting new opportunity for an experienced New Homes Manager to join their Land & New Homes team. Full details and how to apply here
  • Head of Residential
    Savills is advertising for a Head of Residential to join its Wimborne office. Full details and how to apply here
  • Quantity Surveyors
    Berkeley Group is recruiting for experienced Quantity Surveyors to operate from exciting developments in the London area. Full details and how to apply here
  • Lettings Negotiator (Maternity Cover)
    Ashdown Marks are looking for someone who takes pride in their work, is organised and committed to delivering the highest level of service to tenants and landlords The role will involve: 1. Proactively researching the local market and establishing ways to develop a competitive advantage through local networking. 2. Ensuring that legal tenancy agreements are
  • Head of Marketing
    “This is a unique opportunity to join a dynamic and effective team and help one of England’s leading public bodies achieve its important mission.” Full details and how to apply here
  • Negotiator
    Carter Jonas is recruiting for a Lettings Negotiator to join its Knightsbridge and Chelsea office. Full details and how to apply here
  • Associate/Senior Lettings Negotiator
    Our client is an international, upmarket independent estate agency with one of the largest network of branches in London. They have gained an enviable and respected reputation from their exceptional delivery of service to clients, which has been recognised and awarded. The company is currently looking for an Associate/Senior Lettings Negotiator to be based in
  • Paralegals
    Anthony Gold is looking for two Paralegals to join its Housing & property disputes team for a two-year contract. Full details and how to apply here
  • Negotiator
    Based in our Virginia Water office, the Residential team are recruiting for a Negotiator. Full details and how to apply here

Free email newsletters

Please let us know which email address you would like newsletters to go to, and how often you would like to be kept updated.

* indicates required
Which newsletters would you like to receive?

Already signed-up? You can change your preferences by clicking the "Update your email newsletter preferences here" link at the bottom of the latest Bulletin or Briefing you received from PrimeResi.com. Or just put your email in again above and follow the links...

PrimeResi Quarterly Journal

The handbook of the luxury property industry

Click on the cover to find out more

PRQ7

Understanding and Adding Value: A guide to freehold ground rents

With 50 years’ experience investing in freehold ground rents, the Regis Group has seen a significant shift in the prices paid for these often overlooked investments, particularly during the...

With 50 years’ experience investing in freehold ground rents, the Regis Group has seen a significant shift in the prices paid for these often overlooked investments, particularly during the last five years. The days of freehold acquisitions at yields of 15% + are long gone!

The group prides itself on being the only large property investor who invests and holds the asset for the benefit of the company, rather than for third parties such as REIT’s and funds. Consequently, Regis are able to place a higher value on the freeholds they buy and pay close attention to the asset’s ongoing in-house management.

Regis_editorial_image660px

Pricing

The main value driver in ground rents is the rent review and there are two factors to consider: firstly, the type of rent review and secondly, the frequency of the review. Put simply, the more frequent a review, the more valuable the freehold.

There are varying types of ground rent reviews:

  • RPI: Reviewing in line with inflation using the Retail Price Index
  • Doubling: The previous year’s rent doubles upon the date of review
  • Capital Value: Increasing in line with the market value of the unit
  • Stepped: Increasing by set amount as detailed in the lease, e.g. by £250 every 25 years

Ultimately investors are looking for an investment that is protected against inflation and therefore most of the publicly listed house builders grant leases with rent reviews to RPI every 5 or 10 years. RPI rent reviews are now seen as the industry standard, and hence attract the highest values.

Ways to sell

The sale of ground rents is not as simple as traditional residential conveyancing. The principal reason is that the vendor (freeholder) must first offer the sale of the freehold to the leaseholders using a prescribed form of notice pursuant to Section 5 of the Landlord and Tenant Act 1987 (as amended).

Freeholders often fall foul of this piece of Landlord and Tenant legislation by serving incorrect Notices, missing statutory deadlines or offering the freehold at a low value, thereby making the potential purchase of the freehold an attractive option for leaseholders.

Regis Group has decades of experience in this area and can provide advice and assistance in relation to adhering to the Section 5, “right of first refusal” provisions.

Regis Group are well positioned to advise on and are regularly involved in transactions in which the need to serve the Section 5 can be quite lawfully bypassed:

  • Forward sale by developers 

A forward sale of the ground rents can only happen when less than half of the units have exchanged or been sold.

The developer or freeholder is able to contract with an investor/purchaser before there is a majority of leaseholders in the block forming the prescribed number of qualifying leaseholders such that Section 5 Notices have to be served.

Once the sale of the ground rents has exchanged the remaining units can be sold and once complete the developer or vendor is able to serve a notice to complete on the investor and complete the sale within 5 days.

This benefits the developer/freeholder in three ways:

  1. They are guaranteed a price before the build actually starts.
  2. They can avoid the two month delay before receiving funds.
  3. They can complete as soon as the last unit has sold so limit any ongoing management liability of a block they no longer have any interest in.
  • Company purchase 

If the shares in a holding company are purchased then the legal owner of the freehold has not changed hands and therefore there is no requirement to serve Section 5 Notices on the leaseholders.

Legislation also allows the transfer of freeholds to a group company that has been linked to the parent company for more than two years and therefore a ground rent holding can be transferred out into an SPV (special purpose vehicle) and sold as one asset.

Regis Group has undertaken numerous company and portfolio purchases over the years. We possess a large acquisitions and legal team that is able to advise, value and progress purchases with speed and efficiency as per the case study below.

Case study

Regis Group company purchase of circa 600 units across 167 locations in Greater London:

The original owner company had been held in administration for over three years with limited active property management. Regis Group dealt simultaneously with several groups of solicitors, administrators, the managing agent and the residential selling agent. This complex purchase was completed with extensive attention to detail, despite having limited legal information disclosed. The portfolio has now been stabilized.

If you are looking to sell your ground rents, we’d like to make you an offer.

RegisGroup_Logo_NO_PLC_WEB_PurpleContact: Todd Harrison-Moore
Telephone: 0207 318 2285
Mobile: 07732 060 528
Email: thm@regisplc.com
Web: regisplc.com
 
Sponsored Story
Sections
- Opinion -Case StudiesEditors' ChoiceFinanceInvestmentReference Briefings
The Autumn Journal
Media Partner

MORE STORIES

PrimeResi Cookies Policy

Our website uses cookies to improve your experience. By continuing to use this site, you are essentially agreeing to this. Please visit our Terms & Conditions page for more information about cookies and how we use them.