Direct Property Investment Alternatives

Landlords or investors that wish to increase the size of their property investments without taking on the additional management responsibility of purchasing another property could be offered an alternative under a new investment product to be offered by Invista, the former property management arm of HBOS. Invista is looking at launching the UK’s first residential REIT in the spring.

A REIT or Real Estate Investment Trust was a concept that the Government introduced at the beginning of the year. It allows existing or new property companies to operate under a tax shelter with tax only being payable after their funds have been distributed to their individual shareholders. Already 9 of the UK’s largest property companies have converted into a REIT, including Land Securities and Slough Estates. All the REIT’s launched to date have held commercial property. The advantage to investors is that REIT’s pay no tax. They also have to pay out 90% of their rental income in the form of dividends. REIT’s have been very successful in a number of countries across the world including: Japan, the US and France.

The Fund
The property fund held by Invista has a large concentration of flats and houses in the high value London and South East. The portfolio holds approximately 2000 properties and has an estimated value of £500 million. It is expected that the REIT could be launched as soon as this spring.

The Fund Manager
Invista has been the fastest growing property investment manager over the last 3 years. It was spun off from its former owners HBOS in September last year and manages approximately £9 billion of property. Duncan Owen, the chief executive of Invista, said: "The key thing is that this will be the culmination of a huge amount of development and building in a balanced and diversified investment. It will give investors access to residential real-estate style returns with the transparency and liquidity they are more accustomed to in the other asset classes."