The hon. Member for South-West Hertfordshire reminds us of 2006 when the REIT regime was introduced. He will also remember the very strict criteria for the creation of the real estate investment trust. There was a residential criterion, a minimum profit distribution criterion and a criterion that the REIT had to have a full stock exchange listing. The trust could not be a company traded on the alternative investment market or the off-exchange market, and it could not be a private company.
New section 136A(3)(a) states that the regulations may
treat a specified person, or a person in specified circumstances, as forming part of a REIT group.
New section 136A(3)(b) states that the regulations may
provide for a specified provision which applies in respect of members of a REIT group also to apply to others. I want to ask the Minister whether those others, who have been deemed to form part of a REIT group, would also be obliged to follow the same conditions that have been set up for a REIT proper? I am talking about the size of the company, the stock exchange listing, and so on and so forth. I just want to understand for myself how someone can be deemed to be a REIT or part of a REIT if they do not meet the other conditions that were set out in 2006.
Let me go a little wider and ask the Minister the same question that the hon. Gentleman just asked about the strategic vision for REITs. It was clear at the time, I think, that because there was a requirement for REITs to have a full listing on the stock exchange, they would tend to buy high-yield residential and commercial property and there was less incentive, or almost no incentive, for the small-scale investment trusts to build in the for-profit sector rented accommodation in local areas, which is something that I was very keen to see. I know that the Minister at the time said that that was an issue that would be kept under review.
Will the Minister tell us whether there is an intention to remove some of the restrictions, particularly the full stock exchange listing criterion, to allow smaller entrants into the REIT field? The reason for that would be to provide the core profit for housing in the private rented sector which is so desperately needed. Moreover, it will be very helpful if he can answer my specific question on paragraph 7 on connected persons so I can understand how someone connected to a REIT can be defined as part of a REIT group if they do not meet the original criteria.