Real estate trade associations have supported the launch of a new fund type – the Reserved Investor fund (Rif) – following the end of the government’s consultation period on draft tax regulations yesterday (14 May).
The fund type is expected to be available to asset managers later this year, aimed at professional and institutional investors.
Legislation that will see the introduction of the Rif is in its latter stages via the Finance Bill.
The structure is anticipated to be a vehicle for investment particularly in commercial real estate.
See also: Institutional investors double their equity exposure over the past year
Melville Rodrigues, head of real assets advisory at Apex Group, who has led efforts to introduce the Rif, said uses of the fund type could include attracting capital for social and affordable housing and the regeneration of town centres as well as accelerating the infrastructure and green industrial revolutions.
“It’s a privilege to have developed a rapport with officials and to have attracted such goodwill, expertise and enthusiasm within industry,” he said. ” The draft Rif tax regulations reflect a pragmatic and robust way forward for government, the regulator and industry.
“With the Rif legislation being implemented, my passion is for the Rif to attract UK and international institutional capital – and in the process ease the burden on government finances – for regeneration of our town centres, more social and affordable housing and accelerating net zero goals. I’m looking forward to UK fund managers later this year launching Rifs.”
Rifs will be domiciled onshore in the UK – unlike offshore property funds – and will have an effective transparent tax status, meaning investors are liable for tax on the income of the fund on an arising basis, in accordance with their own circumstances.
Paul Richards, CEO at the Association of Real Estate Funds, said: “We represent funds with £50bn in UK property investments alone. We expect the Rif to give our members and their investors, UK and overseas, quick and simple access to projects that can help the UK economy grow, house its people more effectively and make for a more sustainable way of living and working.”
Rachel Kelly, assistant director at the British Property Federation added: “Removing barriers to real estate investment and ensuring that the UK has appropriate fund offerings for investors’ needs will be helpful in bolstering the UK’s funds industry and important in addressing some of the biggest challenges of our time – including our net zero carbon targets, the regeneration of our high streets, and the development of more high quality homes.
“In order for the new Rif to be attractive to the widest pool of investors, the Government should ensure that the Rif is competitive with overseas equivalent fund vehicles. The UK must offer a truly competitive and viable onshore option.”
