On 21 February 2024, AREF responded to the UK Government's consultation on improving transparency of land ownership when trusts are involved in the ownership structure.
The Government have proposed there is a carve out from the disclosure requirements for members of large pension fund trusts because they do not direct or control the investments in the fund. We have requested that this exemption is extended to investment funds - such as unit trusts and other regulated vehicles that meet a Genuine Diversity of Ownership (GDO) style test.
We have noted a number of practical difficulties in applying both the reporting and transparency rules for some investment funds:
- There may be a very large number of investors;
- The investors may change on a regular basis. There are funds in the form of unit trusts that allow daily subscriptions and redemptions;
- There is a high level of intermediation in the market so the ultimate investor may have come through other products in the chain, such as fund-of-funds;
- The identity of a fund manager’s clients is commercially sensitive. They do not want to share this with their competitors.
We have suggested that disclosure should only be made to Government and their agencies initially. This should only be extended to public disclosure, once the Government has a better understanding of the ownership of UK land and property through trusts and been able to assess and mitigate the risks associated with greater public disclosure of the data.
We have identified the following risks with the proposed new regime:
- Less appetite to invest in property as a result of the burden of additional administration requirements
- Reduction in liquidity due to registration backlogs
- Risks to vulnerable, politically exposed, or otherwise at-risk individuals
- Reputational risk due to misleading reporting
- Lower appetite to invest in UK property from overseas investors
AREF’s Public Policy Committee has assisted in drafting AREF's response to this consultation. Also, AREF liaised with other associations to ensure alignment in our responses.
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