Property rules change to solve homes crisis

Efforts to suck billions of pounds more into bricks and mortar and tackle the UK's housing crisis took a step forward today, as the Government published plans to overhaul its property investment regime.

Some 24 companies with £40 billion in assets have converted to tax-efficient real estate investment trusts (Reits) since they were introduced in 2007. But today's moves - published in the draft Finance Bill - should make it easier for big pension funds to invest.

It is hopes that the relaxation of the rules - as well as changes to the stamp duty regime announced in the Budget - will unlock billions of pounds extra in investment from the private sector to address a chronic housing shortage, particularly in London and the South-East.

Deloitte tax partner Phil Nicklin said: "These changes will make UK Reits even better at attracting overseas capital. It's a great step forward.

"Institutional and overseas money is badly needed to help ease the housing crisis."

The main reforms will be the scrapping of charges which saw companies looking to convert to Reit status pay a fee worth 2% of their total assets - often tens of millions of pounds - to make the switch.

Ownership restrictions will be relaxed to encourage more involvement from institutional investors.