The Government announced that it will consult on the SDLT treatment of the seeding of property authorised investment funds and the wider SDLT treatment of co-ownership authorised contractual schemes, one of the two forms of Tax Transparent Funds introduced last year.

PAIFS

Property authorised investment funds (PAIFs) represent an attractive vehicle for broadening investment in real estate. The industry has been lobbying for changes to the SDLT regime to allow assets to be contributed to funds without a punitive SDLT cost. Today's announcement means that the wait for clarity continues.

TTFs

The same applies to the treatment of Tax Transparent Funds (TTFs) which came into effect last summer. The SDLT treatment remains unclear. As an open-ended fund vehicle they would be eminently suitable for property investment if they are treated as opaque for SDLT purposes and a disaster if they are transparent. The real estate investment management industry has been waiting with bated breath for the answer since last July. All the budget provides is news that HMRC is thinking about it. Hopefully the extended consultation period increases the chances of a positive outcome.

The uncertainty leaves those looking to launch or restructure open-ended funds on the horns of a dilemma. A PAIF will be a more attractive option than a traditional authorised fund in most cases, but will in many cases be less attractive than a TTF if the SDLT position for TTFs is resolved such that the TTF is regarded as opaque. If the TTF is transparent for SDLT purposes,it is unworkable as an open-ended real estate fund. As a fund manager, do you launch a PAIF now, only for something better to come along in a few months time, or do you hold fire to see what happens?