Government publishes draft legislation on REITs

The Government has published draft legislation for the introduction of the Real Estate Investment Trust. This follows on from a lengthy period of consultation (including the publication of two consultation documents), which will continue up to the finalisation of the legislation in next year’s Finance Bill.

REIT status will be open to companies resident in the UK and publicly listed on a recognised stock exchange. At least 75% of the activities of the REIT must relate to a "qualifying property letting business" both by reference to the profits arising from, and the value of the assets relating to, the business. This is defined and seems to confirm that hotels will be included although in order to qualify for REIT status the REIT must hold a minimum of three properties so that a company owning a single flagship hotel will not qualify. However, a single property will be defined by reference to a single let unit so that a shopping centre would be treated as a single property. In