Budget 2010: Reits given greater flexibility

Real estate investment trusts (Reits) will be allowed to include stock dividends as part of their 90% income distribution requirements, Chancellor Alistair Darling has confirmed.

Darling says the Government will allow Reits to issue stock dividends in lieu of cash dividends in order to meet the requirement to distribute 90% of the profits from the Reit's property rental business.

The British Property Federation has been lobbying the Treasury for the move, arguing it would help real estate firms conserve cash during the recession and leave them better placed to expand over the coming year.

The amendment is likely to appear in the next Financial Bill, the organisation says.

"Refinancing by the Reits has shown strong confidence in the sector and many are now assessing opportunities for new investment," BPF chief executive Liz Peace says.

"Allowing Reits to have greater flexibility over how they manage their cash will benefit our economy as we begin to see improvements in occupier demand."