Property investors who don’t want to get their hands dirty with full-on property management can now opt to buy a share in Britain’s first tax effective buy to let Real Estate Investment Trust (REIT).
Investors can buy shares in the REIT, which pays no tax on rental profits or capital gains.
The REIT is managed by Mill Group Residential, which intends to float the REIT on the London Stock Exchange, so shares will be tradeable.
Besides direct ownership, REIT shares can also be held in an ISA or self-invested pension (SiPP).
For property investors, besides the tax benefits, the REIT is a means to drip feed small amounts of cash into owning rental property without the hassle of dealing with tenants and maintaining a home.
Investors without large cash deposits can also benefit from investing in a REIT.
Minimum investments start at £1,000 through platform SyndicateRoom. As a REIT, investors pick up 90% of the rental profits as dividends.
REITS are an American investment invention, but were introduced in the UK after April 2007.
Many commercial property REITS are available on the market, but this offering is thought to be the first mainstream UK residential property REIT.
David Toplas, chief executive of Mill Group Residential, said: “With house prices disappearing out of reach for would-be buyers in several parts of the country and mortgage rates expected to rise in 2015, rental demand – and landlord incomes – are going from strength to strength.
“Mill Residential REIT will add further value to its portfolio through development and refurbishment, and offer its shareholders a tax efficient, affordable and, when listed, more liquid alternative to owning a self-managed, buy-to-let property.
“Mill Group Residential has always seen itself as an innovator in the property and finance space, and we view SyndicateRoom as a natural partner to help us raise funds from sophisticated crowdfunding investors in tandem with our initial offering.”