Real Estate Investment Trusts (REITs)

When you hear the term “Real Estate Investment Trust” (REIT), you might envision a trust fund or a financial institution managing assets. However, in the United Kingdom, REITs are something entirely different. They are essentially UK property investment companies that enjoy specific exemptions from paying corporation tax on their rental profits and capital gains from UK property rental activities. The term ‘trust’ can be misleading, as these entities are not trusts in the conventional sense.

The UK introduced the REIT regime in 2007, under the Finance Act 2006. This initiative aimed to stimulate investments in UK real estate and address the persistent issue of housing shortages. While REITs have been a well-established concept in the United States since 1960, the UK’s version has evolved over much less time.