REITs
What is a Real Estate Investment Trust (REIT)?
A REIT (pronounced "reet") operates like an investment trust. It is a quoted company that owns and manages income-producing property, either commercial or residential.
REITs are designed to offer investors income and capital growth from rented property assets in a tax efficient way. This is because at least 90% of the company's taxable income is distributed to shareholders through dividends, in return for which, the company is largely exempt from corporation tax. Therefore removing the double taxation (Corporation tax plus the tax on dividends) of ordinary property funds.
REITS are already established in the US, Australia and France. In the UK, REITS have been fully listed on the London Stock Exchange since 1st January 2007.
Who is it for?
REITs are available to any Computershare Sharedealing customer who wants to gain exposure to the property market without actually purchasing their own property.
How risky are they?
A REIT contains a portfolio made up of a number of different properties, therefore the risk associated with investing in a REIT can be less than investing in an individual property. Different REITs focus on different areas of the property sector such as, industrial, commercial, residential and office accomodation, so it is important to consider which area best suits your needs.
As with any investment, performance is not guaranteed and the price may go down as well as up. If you are unsure about an investment you should seek independent financial advice.
What are the benefits of a REIT?
- Currently exempt from both Corporation Tax and tax on dividends*
- Liquidity - easily traded on the LSE by web and telephone
- Access to property investment for minimal outlay - opportunities for growth, income and portfolio diversification
- Lower transaction costs than buying property directly (only 0.5% stamp duty on UK REITs compared to direct property which is up to 4%)
- There is no responsibility for property held in a REIT on the part of the investor.
* Tax laws may change
What type of account do I need?
REITs can be traded and held electronically in a nominee based Trading Account just like any other equity.
In addition, REITs qualify for inclusion in tax efficient ISA accounts.
How much will it cost?
Normal dealing charges apply. Find out more about our rates and charges.
To place a trade call 0870 7071606 or login to your account.