The number of Real Estate Investment Trusts (REITs) in the UK has seen a significant rise, with a 61% increase in new REITs in 2023/24 compared to the previous year.
According to advisory firm Lubbock Fine, there are now 45 newly established REITs, up from 28 in 2022/23, bringing the total number of REITs in the UK to 157—an impressive 29% rise from last year’s 122.
Rule changes drive REIT boom
A key factor behind this growth is the removal of the requirement for REITs to be listed on a stock exchange. This change has drastically lowered the financial and administrative barriers, enabling more investors to take advantage of the REIT structure without the burden of costly admission fees and extensive reporting obligations.
REITs remain a highly attractive investment vehicle due to their tax benefits. Unlike traditional property companies, REITs are exempt from corporation tax on rental income profits, making them a preferred choice for investors seeking greater tax efficiency.
The recent relaxation of rules for overseas investments has also played a role in the increase. More overseas companies are now considered ‘REIT-equivalent,’ encouraging a wave of conversions to REITs from international funds looking to capitalise on the UK’s favourable tax structure.
Benefits of REITs: lower costs and greater returns
Neil Williams, partner at Lubbock Fine, highlights the key reasons behind the surge in REITs: “We’ve seen a significant increase in REITs over the past year, largely due to the removal of the listing requirement, which has led to massive cost savings. Existing property funds are converting to REIT structures to pass on more value to investors and enhance returns.”
Williams further explained that the REIT regime is now much cheaper to navigate, making it easier for funds to set up and enjoy immediate tax benefits. “As investors increasingly realise the advantages, the number of REITs will likely continue to grow into next year,” he added.
Expanding into alternative asset classes
REITs are increasingly looking beyond traditional commercial property investments, diversifying into sectors such as student accommodation, logistics warehouses, and renewable energy projects. While logistics and student accommodation have delivered consistently strong returns over the past decade, REITs focused on renewables have struggled historically. However, the new regime may attract fresh investment into this sector.
“Student housing and distribution centres have proven to be highly lucrative for REIT investors, and with the new regime, we may see a resurgence in renewable energy investment,” Williams noted.
