UnaVida | Boost your yield with Real Estate Investment Trustsa

Boost your yield with Real Estate Investment Trusts

YES, you can boost your investment yield with Real Estate Investment Trusts.

What are Real Estate Investment Trusts ?

REITs are essentially companies or groups of companies that manage a portfolio of real estate to earn profits for shareholders. Their special tax status means that they pay no corporation tax on the profits of their rental business, but they need to comply with a number of conditions set out in tax law.


  • REITs must pay out 90% of their property income to shareholders every year.
  • Dividends from REITs are treated as property income to the investor, and are taxed accordingly. These dividends are subject to a withholding tax at basic rate income tax, except for certain classes of investors who can register to receive gross rather than net payments. These include charities, UK companies, and pension funds.
  • REIT shares can be held in NISAs and Child Trust Funds (CTFs), and the managers of these can receive gross distributions, making these highly tax efficient.
  • REITs must be primarily engaged in property investment, rather than in development or other non-property related activities.
  • As REITs are all listed property companies, investments in them are generally very liquid.

The government introduced legislation allowing property companies to convert to REITs. The government does not introduce tax breaks without a reason and they want to encourage members of the public to invest in large commercial property projects as this type of project generally provides employment opportunities. Large real estate projects that involve REIT’s include office complexes, hospitals, shopping centres and other large commercial projects

It is best to diversify your holdings in REIT’s and spread your investment in property in different property sectors and locations.

Large commercial property investments have financially strong tenants who are able to enter into long term lease agreements. The long leases provide a consistent and often high level of income.

Our View

As with all investment decisions you need to consider whether investing in REIT’s is suitable for you.

That depends on a variety of factors for example if you are over 50 and looking forward to retirement you will need to adjust your investment strategy AND include investments that provide consistent high levels of income. REIT’s provide this because of their high yield and capital uplift over time.

We believe that investing in REIT is very useful for clients in this category and we are currently obtaining yields of around 6% for clients.

AS REIT’s are a form of investment trust AND there is a high demand for investments that provide high levels of income then they will often stand at a premium to net asset value. That means that the price of the shares is higher than the net asset value of the assets they hold.

So good timing is essential, if possible therefore time your investment into a REIT when the premium is low.

Our research has recently unearthed a first class REIT that is at an early stage – so we have recommended our clients get invested before it achieves a premium on the price of its shares.

If you have Corporate Bond investments you should consider diversifying some of these into REIT’s.

Registered in England and Wales. Registered Number 5553273.
Registered Address: 8f Millars Brook, Molly Millars Lane, Wokingham, Berkshire, RG41 2AD.

A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

UnaVida Wealth Management Ltd. is directly authorised and regulated by the Financial Conduct Authority (440577).

The guidance in this website is primarily aimed at a UK audience and is subject to regulation by the Financial Conduct Authority (FCA).

The Financial Conduct Authority does not regulate tax planning, estate planning, or wills and any form of legal documentation.