Treasury denies changes imminent on REITs
The Treasury has rebuffed reports that significant changes will be made to legislation covering real estate investment trusts (REITs) in the Budget next month.
Sunday newspaper reports suggested that Chancellor Gordon Brown would "rewrite" the rules for REITs, making it easier for companies, including pubcos, to ring-fence their property income in the new trusts, which were launched last month.
A spokesman for the Treasury said that while legislation was constantly under review it was unlikely that changes would be made so soon after its introduction.
"There is a long-established principle that things like this are kept under review, but the REIT regime has only been in place for a month so talk of changes already are a bit premature," he said.
"When you implement a policy you do undertake fine-tuning, but it would be speculation to say that anything would emerge from the next Budget, the exact date of which has yet to be set," he added.
A number of large, asset-backed pubcos are considering becoming REITs, although some have backed away from being the first to do so, for fear of prompting retrospective - and possibly negative - changes to the legislation.
Hamish Champ, City & Business Editor, writes: "One could be forgiven for wishing there was something else to get worked up about at the moment, but real estate investment trusts (REITs) seem to be the subject of the moment, so you'll have to bear with us. As a business tool, REITs offer companies among other things tax-efficiency and this is what prospective participants are examining in great detail. But things are not as clear as people would like right now. Industry looks for certainty from the legislature, while in turn policy makers try to keep their options open for as long as possible, particularly where rules on tax generation are concerned. Divvying up operation from ownership is nothing new for many businesses, but for those unfamiliar with the practicalities the ongoing uncertainty can only be a barrier to making the right decision."
