Finance Bill

Brooks Newmark raises his concerns over delays over tax legislation that gives effect to real estate investment trusts (REITs).

Mr. Brooks Newmark (Braintree) (Con): I want to touch on the impact that the current tax regime has on real estate investment trusts, which are at the heart of what we are discussing. Notwithstanding the Government's recent announcements on introducing tax legislation that gives effect to REITs, I remain concerned that it has not happened. The problem centres around the tax of overseas landlords. Although I understand that prior agreements can and have been established with the Inland Revenue, it is the uncertainty that causes me alarm because it may drive our nascent property fund industry to other countries that have more attractive REITs and tax regimes.

There are three or four specific benefits that I want the Minister to consider. As my hon. Friend the Member for West Suffolk (Mr. Spring) said, if we do not address the problem, we will drive the REIT industry to other regimes. The industry has been extremely successful in the United States for well over a decade, but REIT managers who want to come to this country are being driven to Guernsey, Germany and other European countries with attractive tax regimes. In establishing a bone fide REIT industry, we can offer the great benefit of our successful private equity industry. As we have seen in the United States, many private equity firms have successfully established property fund managers who in turn have established REITs.

REITs can benefit the United Kingdom economy and the Chancellor. Unless we attract people to this country and develop an attractive REIT regime, we will not increase employment in the City, which is the heart of the financial centre of Europe. It is important that we capture our talent and bring in more investors to the real estate industry as a whole and to REITs specifically. If we employ more people in that industry and, again, in REITs specifically, that will increase the tax take in terms of income tax, because more people will be employed, and in terms of the companies that are established. I ask the Minister to think about what we need to do and to consider the amendments so that we establish a successful REITs industry sooner rather than later.