There are just over 1,000 REITs – or real estate investment trusts – around the world with a combined market capitalisation of around £1.5trn, according to the National Association of Real Estate Investment Trusts in the US.

Of these, 163 listed and private REITs sit in the UK. Among them are real estate giants SEGRO, Landsec, LondonMetric and British Land.

The increase in the UK corporation tax rate from 19% to 25% from April 2023 has caused investors to look more closely at REITs. Many investors could benefit from a 20% effective rate or less depending upon whether they benefit from treaty rates or exemptions.

About to join the growing REIT crowd is residential investment group Grainger, which will complete its transition to REIT status at the end of September. The company’s chief executive, Helen Gordon, is excited about the move. “I think it will broaden our shareholder base; it makes us more attractive,” she says.

“Compared with the US, we’ve got a very, very small amount of individuals owning shares and this is a way in which individuals can invest directly into the residential market. So hopefully that will enable us to grow and get a very diverse shareholder base.”

From my perspective, becoming a REIT is about unlocking long-term value
Harry Fenner, property entrepreneur

But to become a listed REIT, a company must satisfy a range of requirements for it to benefit from that broader shareholder base and the tax efficiencies the regime offers.

“There are a lot of hurdles to overcome before becoming a REIT,” Gordon explains. “We thought it would take us 15 years to do it. We’ve done it in nine.”

Over the medium term, around five years, Gordon believes the conversion to REIT status will see the company grow significantly. “We will be growing our EPRA earnings quite significantly over that period,” she says. “At the moment, since the start of our strategy, we’ve been delivering on average 19% earnings growth per annum, and that’s set
to continue.

“With the pipeline we’ve identified, we’re going to double earnings, so we will continue on that trajectory.”

Stable regime

Rob Williams, managing director in the tax practice at FTI Consulting, suggests property companies choose REITs for several reasons. “The REIT brand is globally renowned and well understood, making capital raise easier than other property investment vehicles,” he says.

According to Williams, the regime itself has proved stable over the years, with few changes being implemented since its UK launch in 2007, giving confidence that its benefits will remain available for the foreseeable future. In addition, REITs have a benign tax profile, with rental profits and capital gains shared before tax, and properties are rebased to market value on entry and exit from the regime.

Williams adds that, after a relatively steady first decade, there has been an explosion in new REITs in recent years, particularly following rule changes in April 2022.

“One of these rule changes was a relaxation to the listed company requirement, which enabled property groups with sufficiently diversified investor bases to enter the regime without needing to list on a recognised stock exchange for the first time,” he says.

“This has led to a swathe of new entrants backed by private equity funds and other institutional investors. The REIT regime has now become virtually the default UK property investment structure for groups with a suitably diverse underlying investor base.”

However, Lacy Gratton, corporate real estate partner at law firm Taylor Wessing, raises one important factor: “Not all property-derived development gains are exempt from tax within a REIT structure as the policy is to encourage property investment and not transactions akin to a trade of property development and sale.”

For example, if you sell a property within three years of a substantial development, profits may be taxed – the ‘three-year development rule’. “Compliance also matters,” Gratton explains. “HMRC can impose charges or eject persistent offenders, with reported breaches rising notably in 2023-24 as more vehicles enter the regime.

“Public REITs can trade at a discount to net asset value, most commonly during market downturns, disconnecting share prices from underlying property values. This volatility can persist for extended periods, undermining the stable income narrative.”

Main attraction

Harry Fenner, property entrepreneur and founder and former chief executive of Navana Property Group, which he sold in February 2025, says one of the most tempting reasons to seek REIT status is to unlock value in a group’s portfolio. “From my perspective, becoming a REIT is about unlocking long-term value while aligning with investor appetite for income and transparency,” he adds.

For property firms, especially those with stable rental income, REIT status provides a robust framework that supports institutional-grade governance and offers material tax efficiencies, according to Fenner. He adds:

“It’s a strategic move that signals maturity, focus and a clear commitment to sustainable income distribution, something investors increasingly prioritise.”

Fenner also believes there will be many more groups seeking to reap the benefits of becoming a REIT in the near term.

“There’s strong noise in the market around large-scale residential platforms exploring REIT status, particularly those with stabilised build-to-rent assets,” he says. “I’d also keep an eye on health and care portfolios, and a few logistics plays sitting with private capital that are likely REIT-ready.”