Real estate lawyers have welcomed last week’s dual developments on upward-only rent reviews and Real Estate Investment Trusts (Reits).
The issue last Wednesday (16 March) of the Government’s discussion paper on Reits brought the UK a step closer to their introduction following a protracted hiatus.
The Government emphasised that the creation of Reits will not result in tax revenue loss, but it did not table details of the size of the conversion charge. The charge will be a critical factor in determining the success of the vehicle.
Meanwhile, property lawyers celebrated the Government’s decision to drop proposals to make leases more flexible by legislating against upward-only rent reviews. Retailers had been lobbying the Government for a ban on upward-only rent reviews, which mean rents cannot be negotiated downward when they come up for renewal.
The proposals had sent shivers throughout the property industry, which feared that legislating against upward-only reviews would devastate the UK’s property investment market. The British Property Federation and the British Council of Offices had lobbied against the proposed changes.
SJ Berwin‘s head of real estate Jon Vivian said that in the context of leases growing ever shorter and more flexible, legislation was unnecessary. “The market should decide,” he said.