The United Kingdom could soon see the introduction of tax-friendly property investment vehicles similar to real estate investment trusts, or Reits, operated in the United States and elsewhere, after the Treasury announced it is to begin a consultation exercise on the issue.
As the government tries to find a way out of the country’s boom and bust property market, a recent Treasury report concluded “that a tax-transparent property investment trust would improve liquidity, transparency and scrutiny, provide access to property for long-term savings and could expand the private rented sector."
The move has been welcomed by the property sector, which is also encouraged by the publication of draft legislation that will reform tax rules to allow the development of a property derivatives market, enabling investors to hedge themselves against periods of falling property prices.
A consultation document on the establishment of property investment trusts is to be published along side the 2004 budget with legislation possibly put in place as early as 2005.
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