The Government’s REIT scheme, heralded as a means of drawing cash into property investment, has been a flop, according to a damning report from the House of Lords.
The high hopes investors and property groups had for Reits have not been fulfilled, the Lords’ Select Committee on Economic Affairs has declared. It said that the Government had to take a share of the responsibility for this, and could not put it down to the recent property slump.
The criticism is important since few in the property market have gone so far as declaring it a disappointment or a failure. The Lords committee, chaired by Lord Vallance of Tummel, was withering in its criticism of the scheme, in which property companies can convert into Reits to receive tax advantages.
In its report on the Finance Bill, the committee said: “Reits were introduced after careful planning and amidst high hopes. But they have not lived up to expectations, since there are no residential Reits, nor any new ones not converted from property companies. It is difficult to conclude that this is wholly due to economic circumstances and not also to structural defects.”