There is increasing expectation that the Treasurys pre-Budget report is set to give the green light for legislation that will make conversion to REITs attractive to property developers.

Phil Nicklin, Deloitte tax partner and member of the government working party on real estate investment trusts, said: "As long as the government doesnt get cold feet then we should see an announcement in the pre-Budget report."

However commenting on the conversion tax, which is expected to be in the region of 4%, Nicklin believes that this figure would prove too high to make REITs attractive to property companies. A tax rate of as low as 2% is deemed more suitable by some industry experts, including Richard Quenby of Addleshaw Goddard, who believes that such a lower rate would stem the flow of offshore companies, particularly those defecting to Jersey and setting up Jersey-based property unit trusts (JPUTs).