Budget 'unlikely to reveal significant changes to Reits'
The Budget is unlikely to reveal significant changes to real estate investment trusts (Reits) legislation, according to one expert.
Gordon Brown is to deliver what many believe to be his last budget next week, as he is widely expected to take over the role of prime minister from Tony Blair.
Dave Butler, programme coordinator at the Real Estate Investment Trusts Association (Reita), which is an impartial source of expert information about quoted property investment, predicts that it is unlikely that the Budgets will deliver changes to Reit legislation.
He said that the regime for Reits "has only been in place for a couple of months", meaning that the Treasury will be examining the effects of changes that have been taking place.
Mr Butler continued that if adjustments are to take place they will only be "technical" and nothing "significant".
This coincides with research from Baker Tilly suggesting that there will be few major changes to Reits legislation in coming months.
However, calls have been made to ensure that Reits become a "really dynamic sector" in commercial property.
Mr Butler says that "There are clearly areas where the legislation does need to change. It would be wonderful, but we don't expect to see them yet.
"I think the areas that are not quite sorted out yet are: making the regime suitable for bringing offshore properties and trusts back onshore there is no incentive for them to do that yet".
He added that there are still some issues surrounding "seedling vehicles" for UK Reits which are yet to be developed and also called for legislation over seven areas that he believes need clarification.
Citing the example of a shopping centre, Mr Butler said that those owning property such as Capital Regional would face the question as to whether they operate all the Snowscape centres and these currently cannot meet Reit legislation.
He also said that legislation surrounding overseas property "could do with some tidying up", since it is quite restrictive on the way investors can hold stock on balance sheets in the UK.
Meanwhile, Ian Jones, tax partner at KPMG, says that there will be some changes to Reits in the forthcoming Budget in order to "tidy up the first round of legislation."
Mr Jones commented: "The first wave of Reits were very much the existing property groups converting into Reits.
"Some of the legislation didn't fit in easily with newly formed groups listing as Reits and there are various provisions they will be changing in relation to that to make things easier."