The Barker Review, commissioned chancellor Gordon Brown anddeputy prime minister John Prescott, concluded that "given thebenefits that may result from greater institutional investment, andthe role REITs play in other countries' housing economies, theremay be merit in the government looking at ways to promote greaterinteraction between institutional investors and the residentialproperty market".

The report by Kate Barker of the Bank of England's MonetaryPolicy Committee concluded that direct institutional investment inresidential property is low. It added that institutions in othercountries typically invest through tax-transparent propertyinvestment vehicles, such as REITs in the US.

Institutions told the review that greater investment could beencouraged through tax changes. They argued that REITS could helpimprove the quality of private rented stock through greaterinvestment, increase the willingness of housebuilders to build moreof the type of units favoured by investors and contribute togreater stability in the housing market as institutional investorsare less reliant on debt financing and less vulnerable to interestrate changes.

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