The U.K. property industry has been talking about it for many years but perhaps the time has finally come: U.S.-style securitized real estate investment trusts (REITs) could be on their way to Britain.
Property experts and lobbyists are convinced that the U.K. government is being won over to the idea, primarily as a way to increase investment in Britain's private residential sector but also as a boost to investment in the commercial property sector.
"One gets the impression in discussions that there is a lot of support within the Department of the Environment, Transport and the Regions and perhaps the Treasury ... but the people who need convincing are the Inland Revenue," said Michael Chambers, the head of the Royal Institute of Chartered Surveyors' (RICS) policy unit.
Among other regulatory changes, the introduction of REITs would involve significant changes to how property investments are taxed and the Inland Revenue, the U.K.'s tax authority, is concerned that the changes will lead to a significant drop in tax receipts.
RICS has been working with the Investment Property Forum and the British Property Federation to convince the government that the changes would be beneficial, and has helped to foster a study being conducted by the London Business School, Arthur Andersen and Savills, which is examining how a REIT-like vehicle would be structured and what impact any changes would have.
Chambers stressed, however, that the Treasury has yet to make a final decision, but "there certainly seems to be a stronger interest than there was before."
Securitization experts, however, expressed skepticism. "We've been hearing the same rumors for years it looks like we're getting nearer, but I'll believe when I see it," said a rating agency source.