Want to Invest in a New Property Ring?
Perhaps the most bizarre story floating around in recent days is that the public are to be offered the chance to purchase shares in new prisons under a “buy to let” scheme being considered by the Home Office.
With the refusal of the treasury to fund new prisons, the Home Office under John Reid is looking at alternative ways to finance them. Parliament has agreed to 8,000 new places, of which 4,000 are going to come from existing prisons and the remaining ones coming from new prisons.
The proposed buy-to-let model uses “Real Estate Investment Trusts” (Reits) which are to be launched by the Treasury in January and will enjoy tax exemptions that were agreed under a Finance Act this year.
Under the proposed system, the prison operator would rent the facility from the Reit and the income would be channelled back to the investors. Private prison contracts tend to be long-term in Britain, with 25-year leases common.
Its been said that the type of people who will be attracted to the scheme will be ones looking for income rather than growth.
It just seems a little absurd to me and raises more questions than it answers. I know I might be guilty of being a tad silly, but will Lifers get a right to buy? Will investors demand the prisons are kept full to maximise dividend income and what happens if we have a Strangeways?
The new breed of buy-to-let tenant?
