The government is likely to restructure the procurement of hospitals, housing for key workers and schools by allowing the public to buy shares in them.

A source close to the government said hospitals were at the head of the queue for this kind of procurement, as they were already funded and built in that way in America.

“It is already happening with hospitals in the States, and likely in the UK, as well as for key-worker housing and even schools, “ said the source.

If this form of procurement gets the go-ahead the vehicle for bringing projects to the market would be the tax-transparent Real Estate Investment Trusts (REITs), introduced in to the UK on 1 January.

A REIT is listed on the stock exchange, allowing the public to invest in property.

As Building revealed in November, the Home Office is already looking at this form of funding for a new-build prison programme to house 4,000 people (24 November, page 9).

REITs are already happening with hospitals in the States, and likely in the UK, as well

Building understands that the Home Office and the prison service are in discussions about this.

John Fraser-Andrews, an HSBC analyst, said this week that there was scope for public sector assets becoming REITs.

The first wave has been taken up with property companies, including Land Securities, British Land and Hammerson, which all converted to a REIT structure on 1 January to benefit from tax concessions.

However, Fraser-Andrews said share prices in these developers had not risen this year as investors had already taken the benefits of being a REIT into account.

Last year share prices among FTSE 100 property companies rose 45% in anticipation of the introduction of the new regulations.

Postscript

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