Call for housing sector to push for unlisted REITs
The British Property Federation has called on the social housing sector to provide a strong response to a government consultation on real estate investment trusts.
In yesterday’s Budget, George Osborne announced that the Treasury would be consulting on how using the REIT structure – which allows organisations to launch tax-efficient stand-alone property companies that can attract institutional investors – could help housing associations bring in new sources of finance.
Speaking to the National Housing Federation’s annual finance conference today, Ian Fletcher, senior policy officer at the BPF, said that a move to allow REITs to be formed without having to list on the stock exchange would open the door for housing associations to launch their own REITs.
‘We have asked Treasury for unlisted REITs [before] and they have not been that receptive,’ said Mr Fletcher. ‘But the sector should be pushing for unlisted REITs.’
Unlisted REITs are potentially more attractive as listing a company on the stock exchange would otherwise be an extra cost burden for associations.
Mr Fletcher added: ‘This is ultimately about a alternative source of funding and a way that a big capital sum can be brought in fairly quickly.’
He urged housing associations to respond to the Treasury consultation, which is expected to be launched in the next few days.
Social landlords have so far given a lukewarm response to the prospect of the softening of legislation around REITs. While Places for People has publicly expressed interest in forming a REIT, given favourable conditions, others have been less enthusiastic.
‘We have got other ways and means of managing our tax and of getting funding so I’m struggling to see how REITs would increase borrowing capacity,’ said Ken Youngman, finance director at Family Mosaic. ‘I’m not sceptical; I just think we have enough options that we don’t need it.’