UK Real Estate Investment Trusts (UK REITs) were introduced by the Finance Act 2006 to give investors a tax-efficient way of getting exposure to commercial property. This special tax regime came into force on 1 January 2007 and, by February 2007, nine of the UK's largest listed property companies had converted to REIT status. These included, amongst others, Land Securities, British Land, Great Portland Estates and Primary Health Properties. Despite the initial impetus, UK REITs have not managed to attract the interest of smaller property companies and housing associations, principally as a result of certain restrictive qualifying rules and a 2% entry/conversion charge.
However, the UK Treasury has recently issued the results of its informal consultation, indicating that it is poised to abolish the conversion charge for companies joining the UK REIT regime and relax the current listing requirements by allowing REITs to be listed or admitted on the PLUS Market or the Alternative Investment Market (AIM). These and other changes to the UK REIT regime outlined in this article are expected to be included in the Finance Bill 2012.
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