The Government took a step towards unlocking tens of billions of pounds to tackle Britain’s housing crisis yesterday as it launched a consultation on extending its tax-friendly property investment regime.
The Government took a step towards unlocking tens of billions of pounds to tackle Britain’s housing crisis yesterday as it launched a consultation on extending its tax-friendly property investment regime.
The exercise will explore the role that Real Estate Investment Trusts — introduced five years ago — can play in social housing, potentially by allowing housing associations to take on the tax-efficient status. They would then be exempted from corporation tax, as well as taxes on rental income and property gains, and so could pay higher dividends.
Expanding Reits to social housing would suck in much-needed cash, allowing investment in thousands more homes, according to Deloitte real estate tax partner Phil Nicklin.
He said: “The fact that we’re having a consultation shows that ministers are keen on the idea. Some of the biggest institutional investors have vast amounts of money to spend. There’s pent-up demand to invest in this because it offers steady, long-term returns but on the other side the housing association needs the funds as government grants are going down.”
