Why REITs are reshaping real estate investment
Andrew Moyser · Posted on: October 17th 2025 · read
REITs can play an important role in property investment strategies, offering both income management and tax efficiency. Andrew Moyser, Head of Audit & Assurance at MHA, shares his insights, drawn from his experience advising may of our firm’s high-profile clients, and those with more complex audits to explain why REIT status is emerging as a strategic choice for long-term growth and investor appeal.
Why do companies opt for REIT status?
The principal reason companies convert to REIT status is the favourable tax treatment. Once in the regime, qualifying rental profits and capital gains are exempt from corporation tax, provided that at least 90% of rental income is paid out as dividends, known as Property Income Distributions (PIDs). This makes REITs especially attractive for investors who are seeking regular, predictable income streams. It also removes the ‘double taxation’ effect, where both the company and the shareholder might otherwise be taxed on the same profits.
How do companies become a REIT?
Becoming a REIT requires meeting a set of statutory conditions. A company must be UK tax resident and listed on a recognised stock exchange, which ensures transparency and governance standards. In addition, at least 75% of its assets and income must come from its property rental business. The shareholder base must also be sufficiently diverse to avoid being a closely held vehicle. The conversion process involves both structural and tax considerations, often requiring significant preparation to ensure compliance with the rules from day one.
What are the advantages of being a REIT?
"Beyond the headline tax exemption, there are several strategic benefits. REIT status often improves access to capital by broadening the investor base, as institutional investors and pension funds actively seek REIT exposure for the steady income they generate. REITs also typically enjoy a lower cost of capital and can trade at a premium due to their perceived transparency and liquidity. Importantly, the regime provides a level playing field with listed property companies in other jurisdictions, making UK property a more competitive and attractive investment destination."
How popular has REIT status become?
Since the UK REIT regime was introduced in 2007, uptake has been significant, particularly among large listed property groups. More recently, we have seen specialist and mid-market players exploring REIT status, particularly in sectors like logistics, residential rental, healthcare, and student accommodation. While market cycles influence the pace of conversions, the structure has proven resilient, and demand remains steady.
What are the forthcoming REIT conversions to look out for?
It’s difficult to comment on specific names before announcements are made, but there is clear momentum in alternative asset classes. We expect continued interest from companies in the living sector (build-to-rent and student housing), logistics, and healthcare, where rental income profiles are strong and investor appetite remains high. These areas align particularly well with the REIT model.
What are the rules for Irish REITs?
Ireland introduced its REIT regime in 2013, broadly mirroring international models but with some local variations. To qualify, a company must be Irish tax-resident, listed on a recognised stock exchange, and primarily engaged in property rental. At least 75% of its assets and income must come from rental activities, with no single property making up more than 40% of the total portfolio.
A minimum of 85% of rental profits must be distributed to shareholders each year, ensuring a steady income stream, while the REIT itself benefits from exemption from corporation tax on qualifying profits. Other requirements apply around portfolio size, concentration limits and financing, which ensure diversification and appropriate leverage. Investors, however, are taxed on dividends received, and Irish residents also face capital gains tax on share disposals.
Next steps
If you're managing property portfolios, it could be a good time to revisit the REIT framework to assess whether the structure aligns with your long-term strategic goals, income distribution plans, and tax efficiency.
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