Another good day for REITs
30 March 2012
Phil Nicklin, real estate tax partner at Deloitte, the business advisory firm, comments on the updated draft REITs legislation published today in the Finance Bill (effective July 2012):
“It’s great that Government has responded positively to representations made by the industry. They have made some real improvements to the draft REITs legislation published in December.
“The new diverse ownership rule for institutional investors has been extended to include charities and registered social landlords. This is a much needed first step in allowing housing associations to use REITs to attract institutional money into affordable housing.
“Together with last week’s announcement of a wider consultation into social housing REITs, Government looks committed to helping housing associations find alternative sources of capital to replace dwindling grant funding.
“The real surprise when the draft Finance Bill was published December was a new requirement for a REIT’s shares to be traded, which could have got in the way of small clubs of institutional investors forming REITs. Thankfully, today’s updated draft legislation addresses those concerns.
“Other changes, announced in the 2011 Budget, will come into effect this July. This includes: abolition of the two percent entry charge; a three-year grace period for new REITs to meet the diverse ownership requirement; and, ‘cash’ becoming a good asset.
“It is encouraging to see Government again supporting REITs as a means of attracting institutional money into UK property.”
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.
Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.