M&G: FTSE 100 giant hits out at Rayner’s ground rent cap as it suffers loss
Asset manager M&G has swung to a loss driven by the Labour government’s introduction of a cap on existing ground rents. The FTSE 100 group hit out at the government after it reported a £165m loss for the first six months of the year, driven by a £325m write-down eating into its bottom-line. In its [...]
Asset management firm M&G has reported a loss of £165m for the first half of this year due to a government-imposed cap on existing ground rents. The FTSE 100 group reported a 15% increase in its core operating profit to £435m, excluding the write-down. Housing Secretary Angela Rayner supports the £250 annual cap on pre-existing ground rents, which refers to the annual fees paid by current leaseholders for the land beneath older properties.
M&G holds approximately £722m in UK ground rent assets that generate income for future customer pensions. The firm recognized a £325m write-down after the cap reduced the cash flows the freeholds could collect, thereby slashing the value of the assets. M&G's CEO, Andrea Rossi, expressed disappointment, stating that a proportionate solution could not be agreed upon.
Labour aims to eventually reduce the cap to £0. M&G had lobbied for a softer alternative, advocating for a cap tied to initial lease amounts with inflation-adjusted escalations instead of the blanket £250 cap. M&G's total assets under management increased to £387.4bn, with net inflows reaching £2.4bn, driven by strong private markets and public asset management inflows.
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