McCarthy & Stone demands exemption from ground rent charges

“The market leader in developing retirement homes has urged the government to exempt it from plans to reduce ground rents on new long leases to zero.

McCarthy & Stone used a trading update for the first half of its year to say that it was working in a state of uncertainty and wanted “swift clarification” on the new rules.

Last summer the government said that it would ban the sale of new houses on a leasehold basis and was setting all ground rents on long leases to zero, including on newly built flats.

McCarthy & Stone, which controls 70 per cent of the retirement housing market, specialises in flats and sells most of them leasehold, with the freehold sold to private companies. It argues that this allows it to afford more land to build more homes for the elderly.

The ground rent charged by the private investors starts at about £450 per year and rises in line with the retail prices index every 15 years. Last year McCarthy & Stone made 4 per cent of its revenue, about £27 million, by selling freeholds to investors.

Clive Fenton, chief executive, said: “We believe that there is a strong case for a very specific exemption for the retirement housebuilding sector and we are seeking swift clarification.

“Until this is received, we continue planning to mitigate the potential impact on the business, including maintaining discipline around our cash position and adopting a more measured approach to securing land.” First-half revenue is expected to be broadly flat from the previous year at £240 million.”

Source: Times (pay wall)