The government has ruled out making changes to REIT legislation to enable residential investors to convert.
Chancellor Alastair Darling said in his pre-Budget Report and Comprehensive Spending Review today that the UK REIT regime, launched in January this year had 'been a marked success'.
He said: 'To date 16 companies have become UK-REITs with a total market capitalisation of around £30bn. The Government has recently reviewed the viability of residential REITs and the REITs listing requirements – but has concluded that there is not at present a compelling case for change. However, the REITs regime will continue to be kept under review.’
Reita, the UK education and awareness campaign for REITs and property investment, said it welcomed the government’s comments but urged further action.
Dave Butler , Reita programme coordinator, said: ‘Whilst welcoming the Government's declared support for REITs, we are rather disappointed at the decision not to move on the issues of Residential REITs and the REITs listing rules.
‘Although the regime has certainly been successful in persuading 16 existing property companies to convert…it has so far failed to promote new REITs. Only one, the Local Shopping REIT, has been launched successfully this year and 17 REITs do not yet make the dynamic market that we are all looking for.’
Gareth Lewis , director of finance and investment at the BPF, said: ‘The lack of residential REITs is a real issue and it is somewhat surprising that there has been no move here given that the development of the private residential sector was seen as a key objective of the REITs legislation.