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UK's McCarthy & Stone seeks exemption to any leasehold changes, shares drop

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UK's McCarthy & Stone seeks exemption to any leasehold changes, shares drop

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(Reuters) – Britain’s biggest builder of homes for retirees McCarthy & Stone <MCS.L> said on Thursday it had requested an exemption from the government’s proposal to set ground rents to zero, but would work on strategies to maintain profits if that effort failed.

The company’s shares fell as much as 14 percent, hitting its lowest in over three months. By 0948 GMT, the stock was more than 9 percent lower.

The British government proposed in July that builders be banned from selling leasehold homes in England and ground rents on flats could be cut to zero, responding to public criticism about price hikes facing leaseholders.

“This potential change to the structure of ground rents will be immediately reflected in the cost of land secured for development by McCarthy & Stone with a margin-neutral impact for shareholders in the medium term,” McCarthy & Stone said.

The company said it had made a “strong case” for the exemption of retirement housing providers from such action, and said it would request further details on possible exemptions.

The firm said it would work to mitigate any “disruption” to its profitability if it failed to secure an exemption.

“The proposal to set all ground rents to zero will result in a disruption of housing supply and contradicts the Government’s stated objective of seeking new sources of housing,” it said.

Others housebuilders were also down, including Barratt Developments Plc <BDEV.L>, Taylor Wimpey Plc <TW.L>, Berkeley Group <BKGH.L> and Persimmon Plc <PSN.L>.

(Reporting By Justin George Varghese in Bengaluru; Editing by Edmund Blair)

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