Comparison between Reserved Investor Fund (RIF) and Unlisted Real Estate Investment Trust (REIT) Structures for UK Real Estate Strategies – Key Considerations and Tax Implications

The UK government has introduced two new investment structures, the Reserved Investor Fund (RIF) and the unlisted Real Estate Investment Trust (REIT), as part of a funds regime review. These structures aim to attract institutional investors for UK real estate strategies. The government is proceeding with tax rules to implement the RIF, providing UK real estate fund managers with an onshore structure alternative to offshore options.

The RIF is a tax-transparent vehicle, while the REIT is a tax-exempt company. Each structure has its advantages and appeal, and managers and investors must decide which option best suits their needs and investment strategies. Factors to consider include tax structure, launch and operational efficiency, main investor class, and seed investor contributions.

The RIF offers benefits such as stamp duty land tax (SDLT) seeding relief and flexibility in ownership structures. On the other hand, the REIT can cure latent gains, provide tax benefits for UK-exempt investors, and facilitate international real estate strategies. Different tax considerations, regulatory requirements, and exit options should also be taken into account when choosing between the RIF and the REIT.

Both structures aim to enhance the UK funds landscape and provide more efficient investment opportunities for fund managers and investors. The decision between a RIF and a REIT will depend on individual circumstances and investment objectives. Ultimately, these new structures offer valuable options for those seeking to navigate the UK real estate market.