The sector has started work on ways to make the new property trusts outlined in last week's Budget suitable for social housing.
Amicus Housing Group has joined a forum run by the British Property Federation that will look at how the proposed property investment funds might work. At least three other registered social landlords are believed to be seriously interested.

The chancellor announced last week that he would consult on introducing the trusts, which are low-tax investment vehicles similar to the real estate investment trusts used in the USA. Typically, a REIT invests in rented property and does not pay tax on its profits as long as it distributes 90% of them to investors.

PIFs could use RSLs to manage their properties or invest in homes owned by a commercial subsidiary of an RSL. Associations are also looking at how PIFs could fund affordable housing.

Stuart Henderson, group director of new business at Amicus, said PIFs would need fiscal incentives or subsidies in order to invest in affordable housing. Landowners could be encouraged to sell land more cheaply and quickly given a break from the development land tax proposed in the Barker Report.

Derek Joseph, executive director of consultant Hacas Chapman Hendy, said investment from PIFs could be used instead of bank borrowing in addition to grant. "The sort of return needed to make it worthwhile for investors would be 7%.

"That's not impossible as associations are already paying the banks 5% or 6%."

Source

Housing Today