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REITs could herald more investment

Real Estate Investment Trusts have been hotly tipped to lead the way in allowing people to invest in any property – even their local pub.

Nine of the UK’s leading property developers took advantage of the government’s new legislation and became REITs on January 1.

Reita, the support service for commercial property firms that are converting to REITs, says it anticipates consumers will become more interested in REITs if they can invest in the likes of the Greene King brewery or the prison system.

While Greene King has no firm plans, the brewery says it is open-minded and is reviewing the potential of REITs.

A spokeswoman for Reita says: “These investments will be tangible for normal people and provide an accessible way of getting into property investment. It’s a lot less risky than going for buy-to-let. And REITs have huge potential to make good profits.”

REITs will be exempt from both Income Tax and Corporation Tax. Instead, any tax-deductable income will be divided between shareholders.

But analyst Fidelity Investments last week cautioned that the US and Australian REIT markets took years to bear fruit and says the same could be true in this country.

REITs have also failed to ruffle the feathers of those involved in the buy-to-let market.

Nicola Severn, communications manager for Paragon Mortgages, says: “People may dabble in REITs but professional landlords will continue to invest in their own properties.

“Buy-to-let landlords have control over their investments and that is the key.”

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