As part of the 2005 Pre-Budget Report, the Government announced that it would bring forward legislation for the introduction of Real Estate Investment Trusts in the UK (UK-REITs) to improve the efficiency of both the commercial and residential property investment markets.
The introduction of UK-REIT legislation will provide the basis for liquid and publicly available property investment vehicles available to a wide range of investors, contributing to the Government's wider objectives for raising productivity in the commercial property sector. As recommended by Kate Barker in her independent review of housing supply, UK-REITs will also encourage increased institutional and professional investment to support the private rented sector.
Following two consultation papers published by the Government in 2004 and 2005, HM Revenue and Customs is now publishing, for consultation, draft legislation which would enable the creation of UK-REITs.
The Government stated in the 2005 Pre-Budget Report2 that legislation would be brought forward for inclusion in the 2006 Finance Bill. On this basis, companies meeting the requirements set out in legislation would be able to join the regime for accounting periods beginning on or after 1 January 2007.
The draft legislation published yesterday sets out the Government's proposals for a UK-REIT regime as it would apply to a single company, and includes the key features and rules that such companies would be required to meet in order to join the UK-REIT regime.
The legislation sets out the Government's intentions for a UK-REIT but may be subject to further amendment before enactment. HM Revenue and Customs will also publish shortly further details on how the regime will apply to group structures.
Source: JPMorgan Property