IFM22035 | Real Estate Investment Trust : Conditions And Tests: The Property Rental Business Condition: Condition B: CTA2010/S529(2)

To join and remain in the regime, a UK-REIT is required to meet the property rental business condition (IFM22020). Both conditions A and B, or, alternatively, from 11 July 2023, condition C, must be met throughout each accounting period of the company or group.

No one property can be more than 40% of the total value

Condition B prevents the value of any one property involved in the property rental business from being more than 40% of the value of all the property assets in that business (CTA 2010/S529(2)).

This condition applies throughout each accounting period, but failure to meet it does not always result in immediate removal from the regime. If the breach is not serious (CTA2010/S574) and the condition is not breached repeatedly (CTA2010/S575), the company may remain in the regime, see IFM27030.

For the definition of 'property involved in a business' and 'single property', see IFM22025.

Valuation is using international accounting standards, and ignores any liability or charge over the property. More detail on valuation of assets for this condition is described at IFM22040.

Indirectly held property

For the extent to which indirectly held property (property not held directly by a group REIT member) can count for satisfying the property rental business condition, see IFM22033.

Group REITs

For a Group REIT, the property rental businesses of all the members of the group are treated as being a single business (CTA2010/S529(3)). Property rental business condition B applies to that single business.