PAIFs in payout phase could benefit from the UK government’s consultation with the real estate sector on stamp duty land tax (SDLT), according to the British Property Federation.
Reacting to the UK government’s 2014 Budget, the BPF said additional capital could be attracted through new PAIFs (Property Authorised Investment Funds) if changes were eventually made to current SDLT rules.
At present, funds looking to transfer real estate assets and use them to seed new PAIFs are not exempt from SDLT, despite remaining under the same ownership.
In yesterday’s Budget, the UK government announced it would begin consultation with the BPF on the issue of seed relief.
“A targeted SDLT seeding relief for PAIFs would encourage institutional investors, including life and pensions companies, to create new UK-based investment funds,” the BPF said.
The UK property industry has already had extensive discussions with both the Treasury and HMRC.
Relief for PAIFs, the BPF said, would open up opportunities for defined benefit pension schemes in the payout phase and closed to new entrants.
“Rather than selling assets to the market to fund pension scheme payments, there is strong interest in using those assets to seed new funds and attract additional investment into UK real estate,” the BPF said.
Ion Fletcher, BPF director of policy (finance), said with overseas property investors increasingly interested in non-London real estate, additional capital attracted through new PAIFs could be invested in other parts of the UK.
