Reits change urged for pre-Budget report

The trade body, which represents developers, investors and agents, believes the amendment would help real estate firms conserve cash during the recession and leave them better placed to expand over the coming year.

The federation’s director for finance policy, Peter Cosmetatos, has emphasised that the change would not cost anything to the Exchequer.

In its submission, the BPF said that allowing the amendments would help Reits conserve cash, strengthening their balance sheets and making it easier for them to invest in the current economic climate.

Reits are required to distribute 90% of their property income into the hands of the investors in return for not paying corporation tax. Currently, they can offer shareholders the alternative of taking stock in lieu of a cash dividend. But this does not count toward the 90% distribution requirement, which must be in cash.

John Richards, vice-president of the BPF, said: "Refinancing by the Reits over the last year has shown strong confidence in the sector and many are now assessing opportunities for new investment. Allowing Reits to have greater flexibility over how they manage their cash will benefit our economy as we begin to see improvements in occupier demand. Without the necessary Government support, we could quite possibly see a more serious under-supply in new space, and increased upward pressure on rents, reducing new employment opportunities. This amendment, however, would be a win-win move for the Government."

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