The property industry bodies have published their joint final response to the government's draft legislation for REITs.

The British Property Federation, Investment Property Forum and the RICS have focused their response on the government's most recent proposals relating to groups of companies converting and operating under the REIT regime.

The government has been asked to reconsider the three-year holding period for development properties. The property industry bodies argue that this would provide a disincentive for companies to undertake development and regeneration activities, and so would act against the government's objective to improve the quality and supply of property.

The government has also been asked to consider several recommendations to reduce the administrative burden of companies operating within the REIT regime, co-ownership issues, the tax treatment of group interest charges and the taxation of overseas property interests.

The industry has told the government to consider the inclusion of provisions that would facilitate the movement of assets into a REIT without punitive tax liabilities in a similar way to the US.

Liz Peace, chief executive of the British Property Federation, said: ‘We still have a number of concerns regarding the impact on the success of a REIT of some of the provisions proposed by the government, particularly on the restrictions on gearing and the 10% shareholding restriction.'