RICS seeks 'security and transparency' in EU property market

A well-structured EU Real Estate Investment Trust (REIT) system would not only eliminate distortions to competition in the European real estate market, would but also discourage property companies from resorting to tax havens to avoid double taxation, according to the Royal Institution of Chartered Surveyors (RICS).

RICS - the largest organisation for professionals in property, land construction and related environmental issues in the world - has put its weight behind a call at the Barcelona Meeting Point property fair for a coherent and uniform framework to strengthen the market and boost European property investment flows.

Such a framework would not necessarily require a total harmonisation of tax regimes across Europe, RICS said. Using REITs, taxes would be only levied at shareholder level, and not at corporate level, implying better control of the property market and fewer incentives for using debt, which makes this investment vehicle especially attractive for international investors - owing to reduced risk.

RICS is part of a coalition of property sector organisations that is presenting a report at Barcelona Meeting Point to press the European Commission to begin work on a framework for a EU REIT.

In a statement released on Wednesday, RICS said the benefits of a pan-European investment vehicle need to be better explored if the EU is to 'deliver a genuine contribution to development of EU property markets'.

The organisation claimed that the increasing variety of property share regimes across Europe and their lack of uniformity affected the proper functioning of the EU's internal market. 'Competition between those member states with well-structured, tax-transparent, real estate investment vehicles and those without a proper regime is far from fair. This situation is particularly discriminatory for small countries, such as Denmark and Sweden, and most of the new member states in Europe, whose savers have no access to good quality property investment.'

Simon Rubinsohn, RICS´ chief economist, said: 'A potential framework for EU REITs would enable Europe to diversify its real estate market at an international scale, developing new modern investment products, tailor-made to the new priorities of the citizens. Green REITs, for example, are an excellent tool to modernise the market and prove the financial advantages derived from sustainable buildings.'

Click on the link below to read more about about the call for a EU REIT framework