Real Estate Investment Trusts simplified

The government has addressed financial industry objections to real estate investment trust (Reit) legislation by making it easier for new companies to gain Reit status. Reit proposals had been criticised by the investment trust industry on the basis that there was little or no advantage in a new closed-ended company adopting onshore Reit status over the more relaxed regime of an offshore domicile, with a London-listing.

Now Gordon Brown has said that companies seeking Reit status no long require a stock exchange listing on the day they give notice that they intend to seek Reit status.

New companies will also not be penalised if they fail to distribute 75% of their income to shareholders within the first accounting period. Charity shareholders are also to be exempt from tax on any distributions they receive from a Reit.

Separately the Chancellor has acted to prevent pension schemes from holding more than a 10% interest in an individual Reit.

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