Property companies are expected to be the main beneficiaries of Property Investment Trusts, the UK government's name for REITs. The FTSE 350 real-estate index made early gains immediately after the announcement on Thursday.

The details outlined in the full pre-budget paper were seen by the property industry as a reassuring sign that the government is still interested in the concept of PIFs. "This shows they really are committed to this and are keen to engage with the industry," says John Gellatly, Credit Suisse First Boston's director of real-estate investment banking. "Anyone who had expected a detailed piece of legislation on this was fooling themselves."

Even so, many in the industry were disappointed the government wasn't able to set a timetable for the introduction of PIFs. "We're grateful that the government is still consulting on this issue," says Liz Peace, chief executive of the British Property Federation. "But this does suggest that it's a fairly lengthy process. We would obviously rather that it was quicker than it is."

The UK is the only one of the Group of Seven leading industrial nations, apart from Germany, where investors cannot invest in a tax-transparent property investment product. "People in the industry campaigning for REITs may be disappointed that a more detailed announcement was not made today on the introduction of REITs," says Andrew Hynard, head of capital markets England at Jones Lang LaSalle. "However we thought it unlikely that specific details would emerge in this pre-budget report prior to the general election. We welcome the fact that the government has committed to a firm schedule of consultation and looks set to take REITs forward, although we do not anticipate that this will happen before 2006."