Real estate investment trusts are a bad idea | Letters
THE EDITOR, woman:
An article in the December 29 issue of The Gleaner reported that the government of Jamaica “is considering a bill to facilitate real estate investment trusts.” This is a very bad idea that will only make the housing crisis worse.
A real estate investment trust (REIT) is a company that owns and, in most cases, operates real estate. REITs own many types of commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping malls, hotels, and commercial forests. Some REITs are involved in the financing of real estate.
The laws governing REITs in most of the countries where they exist allow a real estate company to pay less corporation tax and capital gains tax. REITs have enabled housing speculation and reduced the affordability of housing without increasing home finance.
The experiences in Canada with REITs are mostly negative. Typically, tenants are being evicted into buildings with low rents, with the real estate REIT doing minor renovations, increasing the rent, and imposing the new, higher rate on other tenants who have little choice. The result: fewer cheap apartments, more people who cannot afford houses, more profit for huge financial corporations and wealthy speculators.
The solution: decent, income-oriented, social housing – financed through progressive taxation.