PwC has welcomed changes proposed by the government concerning REITs investing in other REITs in a submission today to a government consultation on the fund structure.
The changes would mean that REITs investing in other REITs could receive distributions of rental income without tax leakage. The rationale behind the proposed changes is to encourage broader investment by REITs via new forms of joint venture.
Rosalind Rowe, head of the UK real estate tax network at PwC, said: “It is encouraging that the government is looking at further changes to the REIT regime to remove inefficiencies and to grow the sector.
“Giving a REIT the opportunity to invest in other REITs will enable start-up REITs, with surplus cash, to provide a ‘REIT-like’ return through investing in larger REITs while they seek property. Some REITs have polarised into one sector. Now other REITs can access a sector on a flexible basis through buying shares in the market rather than committing to a fixed investment in a joint venture.
“The REIT brand is strong, and investors understand it. These changes, combined with this year’s repeal of the entry charge and measures to attract institutional investment, are part of a continuing process to keep the regime ‘fresh’ and responsive to a changing market.”
The government consultation on the income generated by REITs investing in other REITs was announced in the Budget in March.
sophia.furber@estatesgazette.com
