BDO finds Chancellors support for residential property UK REITS disappointing

In today's Pre-Budget Report, it has been announced that the Government will look to reduce barriers to property investment companies joining the UK-REIT regime but also seek to restrict the general body of UK corporates restructuring to create a source of property rental income merely to participate in the UK-REIT regime.  

Stephen Herring, Senior Tax Partner BDO LLP comments: "A number of UK corporates with significant property assets (including some large retailers and pub chains) have been exploring the opportunities for obtaining the perceived tax benefits (potentially no UK corporate tax on the profits) available in the UK-REIT regime. Whilst it was always to be expected that the Chancellor would wish to restrict the regime solely to property investment companies, it is disappointing that he has not used the PBR to promote, for example, the launch of residential property UK-REITs; there are currently only twenty UK-REITs and the issue is that there are too few, not too many. The Chancellor must be careful to avoid freezing the regime to new entrants.  Events elsewhere in the property sector have demonstrated that closed end listed entities such as UK-REITs are more commercially robust than open ended funds which are often unsuitable for illiquid assets such as real estate"

UK-REITs were launched on 1 January 2007. The greater part of the rental profits have to be distributed to investors as a quid pro quo for there being no corporate tax on their qualifying profits.

-Ends-

For more information, please contact Matthew Longbottom at BDO on 020 7893 2717, 0797 619 8786 email matthew.longbottom@bdo.co.uk

Notes to editors:

BDO LLP operates across the UK with over 3,000 partners and staff. BDO LLP is a UK limited liability partnership and the UK Member Firm of BDO International. BDO International is a world-wide network of public accounting firms, called BDO Member Firms, serving international clients. Each BDO Member Firm is an independent legal entity in its own country. The Belfast Firm is operated by a separate Partnership.

BDO LLP and BDO - Belfast are both authorised and regulated by the Financial Services Authority to conduct investment business.

BDO is an award winning firm.  Recent achievements include:

Best Workplace UK - Financial Times 2008
100 Best Companies to Work For - The Sunday Times 2008
Audit Team of the Year – Accountancy Age Awards 2008
Tax Team of the Year – Accountancy Age Awards 2008
Corporate Finance Deal of the Year – Accountancy Age Awards 2008
Employer of the Year – Accountancy Age Awards 2007
The Women of Achievement Award –  Women in the City 2008
Top 50 Where Women Want to Work - The Times 2007
Business Superbrand - Business Superbrands 2008