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AREF calls on platforms to help jump-start PAIFs regime


Following representations from the Association of Real Estate Funds (AREF) and the industry, the Government has announced its intention to make a legislative change that will facilitate the creation of tax-efficient property funds, known as PAIFs, for the mass retail market.

AREF welcomes today’s the, which refers to its representations by name, but calls upon the platforms to now make the necessary changes to their systems in order to support PAIFs, thereby making them available to ‘the man in the street’ retail investor.
PAIFs will benefit tax-exempt investors, such as ISA investors and pension scheme members, investing in property. ISA investors that use their full ISA allowance to invest in property funds could be GBP80 a year better off if those funds were converted into PAIFs. Indeed, some GBP1.6 million a year could return to the pockets of end investors if the PAIFs regime was successful.
Currently only a few PAIFs have been launched, all of which have a high minimum investment and therefore exclude retail investors. However, many ‘household name’ property fund managers, collectively representing around GBP10 billion in assets under management, have laid the groundwork to introduce retail PAIFs as soon as possible. The only remaining barrier to the success of PAIFs is the platforms, some of whom have not yet made the necessary changes to their systems to support the income streaming required by PAIFs.
John Cartwright (pictured), Chief Executive of AREF, says: “AREF has long supported the PAIF regime and acted as a main contributor to the Government’s consultation on its introduction, so today’s announcement, which will allow tax-exempt property investors to invest tax-efficiently, is welcome news.
“We have been in ongoing discussions with the platforms, but what we need now is for them to make the necessary changes to their systems to support PAIFs. Only then will tax-exempt property investors feel the true benefit of these tax-efficient funds.”

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