Shouldn't REIT legislation have been watertight to begin with?

Real estate investment trusts - or as you know them well enough by now, REITs - have featured rather heavily in these pages recently. Sorry if you're bored of the blessed things but here are some more thoughts on them.

The apparent flim-flamming of government agencies on what REITs are designed for and whether the legislation covering them will or won't be changed in the months ahead has prompted leading observers to point to a lack of 'joined -up government'.

The experts are certainly warning pubcos not to expect any favourable modifications to the rules, although political fence-sitting leaves anything up for grabs.

One can understand the indecision - or "a preference for evaluating all the concomitant issues relating to the pursuance of correctly aligned procedures leading to legislation devoid of misrepresentation", as Sir Humphrey might have put it - from a government minister's point of view. After all, if the legislation gets bush-whacked then room has to be left for such loopholes to be plugged.

But then shouldn't the legislation have been watertight to begin with?

HM Customs & Revenue says becoming a REIT is not a licence to print off a tax rebate. Maybe I'm off the money here - sadly it's been known to happen - but isn't that exactly what being a REIT enables? A tax-friendly restructuring is at the core of becoming a trust, after all.

Some argue REITs are all about opening up opportunities for investment in a booming property sector and there's no reason to suspect this is not the case. But the tax-saving implications are surely there for all to see.

This is why the government is taking its time assessing whether the legislation gets changed further on. If Gordon Brown sees the new rules working against him then change them he will, and without needing to bring such alterations before Parliament. This is what concerns pubcos, and you can understand why…