After years of stalling, the Government finally caved in to pressure from the property sector and allowed the conversion to and establishment of Real Estate Investment Trusts from January this year (REITs are an established investment in many other countries).  Unfortunately, the year has not been kind to the sector with a loss in share price of almost 25% so far.  They have also been hit by the Governments proposal to introduce a flat rate for Capital Gains Tax of 18%.  Capital Gains realised within the REIT most be largely distributed to shareholders as income, with correspondingly higher rates of tax.

In fairness, most REIT investors would not be buying investment property directly and appreciate the high liquidity of REITs, even if they bring with them higher volatility and slightly higher tax.  it does, though, look as if the hype has proved to be without substance and REITs in the UK may be confined to the fringes for a while.