City real estate practices are extolling the virtues of Chancellor Gordon Brown's Budget, unveiled last Wednesday (22 March), while corporate lawyers are eyeing a series of mouth-watering privatisations.
The expected sale of part of the Government's stake in British Energy could see Slaughter and May reprise the role that saw it collect £7m in fees for the company's restructuring.
Of more immediate significance, however, is the 1 January 2007 introduction of real estate investment trusts (Reits).
The property industry and its lawyers have welcomed the measures announced by the Chancellor, which include levelling the conversion charge to become a Reit at 2 per cent of the gross market value of investment properties.
"We would now expect most UK property companies to be seriously considering converting to UK Reits status. Non-resident property companies may also consider moving their residence to the UK and converting," Porter added.
SJ Berwin head of property funds David Ryland described the measures as a reasonable response. "There's sufficient flexibility there for the property companies to look very seriously at converting [to a Reit]," he stated.
Farrer & Co tax partner Peter Davis sounded a cautious warning on the conversion charge, though. "As the basis is value, and not any capital gain, it seems the charge will bite even on a property that has fallen in value since acquisition, and credit will not be given for any losses from the sale of other properties in the past," he said.
Lawyers said the abolition of 'seeding relief' meant Jersey property unit trusts were now not as attractive, which could push up the demand for Reits.