UK REITs no more?

Despite a government commitment that REITs will reach the statue book by May 2006, Real Estate Investment Trusts could now be chopped at any moment, according to a Treasury spokesman.

According to a Treasury insider, the Government was stilled locked in meetings debating REITs and the potential loss of revenue from capital gains tax, entrance fees and exit fees, should the trusts be structured in the same way as European and US paradigms.

If the Treasury cannot find a means to acquire a certain amount of revenue from the trusts, then UK REITs could eventually be released from the 2006 budget.

REITs have been in existence for over ten years in Australia and the US, where they are used a property funds to control millions of pounds worth of property investments. They were designed to provide a similar structure for real estate investment just as mutual funds provide for investment in stocks and shares.

Companies can put ownership of different types of property into a trust. Commercial and individual investors alike are then allowed to buy a share and receive dividends.

Several UK property companies have spent the past five years appealing for the introduction of REITs in the UK.

A spokesperson for the Treasury announced they could not comment on the meetings or leaks, but admitted that “no final decision had been made” in regards to UK REITs. He later added that the Government intended to give an update on the current situation by the end of October.

Date: 21.09.05