Clause 65

Part of Finance Bill – in a Public Bill Committee at 5:15 pm on 16th June 2009.

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Photo of Stephen Timms Stephen Timms Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills) 5:15 pm, 16th June 2009

The current difficulty is the cost of setting up a REIT for investment in residential property. The model currently works fine for commercial REITs, but there is a cost problem for setting up a REIT for residential investment, and changing that so that is was more attractive for residential investment could lead us into difficulties with EU state aid. The barrier is a cost barrier, but fixing it could cause problems with state aid. Certainly, there would have to be some work to address that.

The hon. Member for Dundee, East asked whether other connected persons would be obliged to follow the REITs conditions. We want the connected person to be part of the existing REIT, rather than a separate REIT, so they would not need to meet all the conditions of the regime. The purpose of that legislation is to prevent a group artificially meeting the requirements of the regime by bringing into the REIT any part of the group that has been artificially removed. I hope that that is helpful and commend the clause and schedule to the Committee.