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Are Ground Rents a Secure Way of Beating Inflation?

In early-October this year, Regis Group, one of the largest residential landlords in the UK, purchased two freehold ground rent portfolios of over 1,200 residential units. The acquisition allowed the Group's existing freehold portfolio to further expand into the Midlands and the North of England, and was part of Regis' ongoing strategy to generate stable, long-term returns from ground rents.

Acquired from established ground rent investor Covent Garden Ltd, the first portfolio comprises a total of 1,039 units across 51 sites in the North of England. However, the purchase reflected a net initial yield of just 3%. A second portfolio of 210 units across 7 sites in the Midlands and North West of England was purchased from Leeds-based developer Harron Homes and showed a net initial yield of 3.3%.

Todd Harrison Moore, acquisitions director at Regis Group, said: "We are keen to continue building long-term relationships with developers and investors to identify established ground rent portfolios for future acquisitions. The ground rent market has become increasingly competitive in recent years as new investors have been attracted by the secure inflation-linked income streams that these portfolios generate over the long-term."

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