Mick Wallace (Wexford, Independent)
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35. To ask the Minister for Finance if he has analysed the impact of real estate investment trusts on the Irish rental market and on property portfolios; if so, if he will provide details; and if he will make a statement on the matter. [1338/16]

Michael Noonan (Limerick City, Fine Gael)
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The Real Estate Investment Trust (REIT) framework was intodcued in Finance Act 2013. Its function is to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply to property investment via a corporate vehicle. The REIT framework is designed to produce an after-tax result for shareholders similar to that from direct investment in property, while also providing the benefits of risk diversification and professional management associated with collective investment.

The acquisition and management of properties by professional REITs is part of a more sustainable, long-term property rental market for both investors and property tenants.  While commercial property investment has been a key focus for some of the REITs launched to date in Ireland, residential property also forms part of the sector's interest and exposure. It is expected that the sector will continue to develop over time and in so doing to increase the supply of professionally managed, good quality, secure and affordable rented accommodation.

Historically the private rented sector in Ireland was characterised by small-scale landlords. The double layer of taxation had tended to result in individual investors holding individual, highly-mortgaged properties. This had exposed investors to significant risk in times of falling equity and falling rental returns.  Attracting large scale investment in professionally managed residential property has an important role to play in helping to deliver the professional high-standard sector that tenants deserve.

The success of REITs has resulted in benefits on a number of fronts.  They have brought new capital into the Irish property market; new listings to the Irish Stock Exchange; and a new risk-diversified property investment option for investors.

With its introduction in 2013, the REIT regime is in its relative infancy in Ireland.  However, the REIT framework will be reviewed in the next one to two years in line with good practice.