Real estate investment trusts (REITs), designed largely to ease the housing shortage, could help to raise prices rather than increase supply, MPs have warned.
MPs scrutinising the finance bill, which will lay the groundwork for the introduction of REITs, have raised concerns that the money invested in residential REITs might be used to buy thousands of existing homes, rather than being used to build new ones, and this would push up prices.
The concerns are shared by independent experts.
John Muellbauer, professor of economics at Oxford University, said: “If anything, REITs would support house prices in the next year or two because it is a new source of money coming into the market.”
References: Financial Times 17/06/06 page 1 and 2
