UK – The UK government is to aid housing construction through a six-year, £1bn (€1.2bn) programme to build the underlying infrastructure required for large residential projects.
The measure was announced as part of the coalition government's autumn statement, which also saw chancellor George Osborne reveal that overseas property investors would in future be subject to capital gains tax, and confirm that UK REITs would now be classed as institutional investors.
The Treasury said the £1bn project to fund infrastructure for residential construction sites would deliver around 250,000 new homes over the course of its six years.
Documents detailing the annual budget update's measures said: "The programme will begin in 2014-15, with investment decisions on [nine] specific sites, capable of unlocking around 27,000 houses.”
It added: “£50m of this will be earmarked for Local Enterprise Partnership-supported bids, to deliver on their ambitions for housing growth."
Osborne also confirmed the government would push ahead with a reclassification of REITs as institutional investors, allowing the property vehicles to invest in rival funds.
Ion Fletcher, director of finance at the British Property Federation (BPF), said the organisation was very pleased the government had listened to its requests to alter the definition of institutional investor.
"By allowing overseas REITs to take significant interests in UK REITs," Fletcher said, "the decision will ultimately increase the availability of capital to the UK market and at the same time promote the transfer of expertise, with widespread benefits for the whole industry."
Rosalind Rowe, real estate partner at PwC, noted that the government was reacting to a decline in debt since the "heady days of 2007", when REITs were first launched in the UK.
"But the market has changed," Rowe said. "REITs have responded to the lack of bank debt by accessing new sources of capital, including increasing the number of joint ventures in which they participate."
She also said the move would allow the funds to be "more agile and diversify their holdings".
"Treating a REIT as an institutional investor does not place any barriers on the percentage of shares one REIT group can hold in another,” she said.
“This will enable the REIT and its co-investor to choose independently when to exit."
However, the decision to introduce capital gains tax for overseas investors from 2015 was less warmly received.
Liz Peace, chief executive of the BPF, warned the measure would only raise tens of millions in revenue, but risked doing "far greater damage to institutional investment in the private rented sector and to housing supply more generally".
"Nevertheless,” she added, “we are pleased the government has heeded our warnings and committed to consult on these proposals.”