The British Property Federation has welcomed changes to the UK Real estate investment trust (REIT) regime .

It argues the changes could attract significant investment in property in the UK.

The government will commence an informal consultation with the industry and the representative body on the REITs legislation shortly after the Budget. Subject to the responses the government will make changes both to reduce the barriers to entry and investment and to reduce the regulatory burden for existing and future REITs.

The consultation will seek views on the introduction of a diverse ownership rule for institutional investors which will enable them to meet the non-close company rule. This will enable institutional investors to set up UK REITs.

It will also discuss allowing cash to be a ‘good’ asset for the purpose of the REIT balance of business asset test. This will allow UK REITs to make investment decisions on a commercial basis

Other topics for consultation include the relaxing the requirement for a UK-REIT to be listed on a recognised stock exchange. This could encourage entry into the REITs regime, particularly for start-up property investment companies.

Peter Cosmetatos, director of Finance at the British Property Federation, said: “We are delighted that the government has grasped this opportunity both to make the UK REIT regime more attractive for new entrants and to make it work better for the UK’s REITs.