Grainger PLC on Thursday hailed a ‘strong operating performance’ but reported a swing to a first-half loss on a valuation hit following a UK government budget measure.

In its spring budget announcement, the government announced the abolition of multiple dwellings relief, which had given buyers a stamp duty reduction when purchasing multiple properties. The removal of the relief means higher purchaser costs, which Grainger explained has been reflected in its half-year property valuations.

The residential landlord reported a pretax loss in the half-year that ended March 31 of £31.2 million, swinging from profit of £5.7 million a year prior. Its bottom line was hurt by the MDR-related valuation movement hit of £58.8 million.

‘Following the UK government’s announcement to change the tax treatment of multiple dwellings which comes into effect on 1 June, our independent valuers at CBRE have applied the impact to our March valuations,’ Grainger explained.

Grainger’s net rental income rose 11% to £53.2 million from £48.0 million a year prior. EPRA net tangible assets per share declined 3.6% on-year to 294 pence from 305p, however. The MDR change reduced net tangible assets per share by 8p, it said.

The Newcastle, England-based company lifted its dividend by 11% to 2.54p from 2.28p a year prior.

Chief Executive Helen Gordon said: ‘Grainger has delivered another strong operating performance over the past six months. Strong like-for-like rental growth and expansion from our successful pipeline delivery have driven further growth in net rental income and earnings and enable us to increase our dividend for the 17th consecutive time since our strategy reset began in 2016. Our portfolio occupancy remains high at 97.7% with customer affordability healthy, customer satisfaction and retention high, and rent arrears low.

‘Our sector’s positive market fundamentals and our strategic positioning mean that we expect rental growth to remain above the historical long-term average for the remainder of this year with scope for it to continue at elevated levels into 2025.’

Grainger said valuations were ‘resilient’, declining 0.3% on-year before the impact of MDR removal.

Grainger added: ‘Our balance sheet remains in good shape with strong liquidity. Our committed pipeline is fully funded and fully hedged, giving us minimal exposure to interest rate rises for five years.’

Grainger shares traded 3.3% lower at 263.00p each in London on Thursday morning.

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