Reita, the promotional body for Real Estate Investment Trusts, has welcomed the Financial Services Authoritys clarification on the regulatory status of REITs.
The move follows research last month which showed more than a third of IFAs were unsure if they could legally advise on the new type of property investment.
Following industry pressure from organisations such as the Association of Independent Financial Advisers, the FSA issued guidance for advisers wishing to advise clients on REITs and investments in collective investment schemes which hold REITs.
The FSA says: Firms do not need to apply to change their FSA permission in order to give advice on REITs as REITs are not FSA authorised firms.
A share in a REIT is a share in a listed company, which is an ‘investment’ in the context of the FSA Handbook.
Dave Butler, programme coordinator of Reita says: The FSA guidance clears the way for financial advisers to be confident when they advise clients on property investments.
In the last IFA research commissioned by reita.org, 34% of IFAs were unsure if they are able to advise on Reits.
From today they will know their position simply by checking their permitted business categories or asking their compliance officers for guidance on this.
So if a firm already has permission to give investment advice in relation to shares then it can advise clients on buying and selling shares in REITs.
“In the same way, if a firm already has permission to give investment advice in relation to collective investment schemes then it can advise a client who wants to invest in a REIT through a fund .