INREV readies second push against 25% capital charge

The European association for Investors in Non-Listed Real Estate Vehicles (INREV) is gearing up for a second push against a 25% capital charge on insurance companies' real estate investments under the incoming Solvency II regime. This week, the European Commission backed the 25% rate despite intensive lobbying from the property sector.

The proposal for the new financial regime for insurers is now due to be sent to the European Parliament. Solvency II is due to come into effect in January 2013.

INREV and other real estate associations including EPRA commissioned a report by the Investment Property Databank (IPD) in April this year that argued the capital charge should be no more than 15%. Otherwise, the report said, insurance companies may reduce their allocations to real estate. INREV said at the time that its fundraising data indicated this was already happening.

Speaking at an INREV event in Madrid on Thursday, Jeff Rupp, INREV's director of public affairs and professional standards, said he was 'disappointed' by the European Commission's decision. But he insisted the campaign to reduce the charge has moved into the second phase. INREV and a number of property associations, including EPRA for the European listed sector, plan to lobby European parliamentarians to influence the debate in Brussels before Solvency II comes into force.

'There is a new opportunity to get the message across in a real public debate,' he said.

The report calling for a 15% capital charge was supported by INREV, the Association of British Insurers (ABI), the British Property Federation (BPF), Bundesverband Investment und Assetmanagement (BVI), EPRA, the German Property Federation (ZIA) and the Investment Property Forum (IPF).