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Property funds could be alternative to BTL

The Treasury is set to introduce a UK version of US real estate investment trusts to improve the market&#39s efficiency while encouraging expansion of the private ren-ted sector.

The Government has iss-ued a consultation paper entitled, Promoting More Flexible Investment In Property, alongside the Budget seeking industry views on property investment funds, which it believes could provide an alternative to the buy-to-let market.

Pifs potentially allow investors to put their money into both commercial and residential property at little cost and with similar ease to investment in Isas.

The consultation is aimed at pinning down a structure for Pifs, particularly in terms of how they could expand the opportunities for small inves-tors to invest in a wider range of property. But, as with Reits in other countries, they could also offer big tax advantages for property companies which are currently subject to double taxation on rent and profits.

The industry says Pifs would curb investors&#39 ten-dency to put most of their money in the highly geared BTL market. As they are likely to have a closed-end structure, Pifs will also be transparent as they would be subject to the strict rules of the Stock Exchange.

AITC communications dir-ector Annabel Brodie-Smith says: “We have all been concerned by the increasing tendency of investors to put all their eggs in the buy-to-let basket. The possibility of UK-style Reits would provide access both to commercial and residential property at low cost and greater convenience.”

Pep and Isa Managers&#39 Association director general Tony Vine-Lott says: “We now call on the Chancellor to inc-lude the new property funds within the Isa structure to encourage as many as possible to benefit from this important new investment vehicle.”


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