Legislation to establish real-estate investment trusts in the UK is expected to be in place by next spring, according to property-sector ana...

Legislation to establish real-estate investment trusts in the UK is expected to be in place by next spring, according to property-sector analysts. The only impediment to this outcome would be a breakdown in the UK’s Treasury’s efforts to resolve the outstanding tax issues which have been precipitating a haemorrhaging of UK property-investment companies who have been looking for offshore moves to gain tax advantages. A government consultation process was completed in July and the recent appointment of outside tax experts is seen by industry watchers as a sign that the Treasury is still actively working to resolve the remaining issues by November, the time by which the UK’s Chancellor of the Exchequer, Gordon Brown, has committed to introducing the REITs legislation. REITs are seen as necessary for property to become a liquid and reliable alternative to stocks and bonds for UK high net worth and retail investors who see property increasingly as a distinct asset class and as an excellent diversification from traditional forms of investment. REITs are publicly traded property-investment vehicles that distribute most of their income as dividends to shareholders. They are largely exempt from taxes at the corporate level, although shareholders must pay taxes on the dividends. Corporate administration is minimised so they have low operating costs and often trade at a premium to their underlying net assets.