The Real Estate Investment Trusts (Breach of Conditions) Regulations 2006

Breach of requirements as to properties

5.—(1) This regulation applies in relation to breaches of Condition 1 (minimum number of properties) or Condition 2 (individual property not to represent more than 40% of the total value of the property value business) in section 107.

(2) For the purposes of section 129(2)(a) (number of breaches during a specified period which are to be disregarded)—

(a) the number of occasions on which the company can rely on this regulation in respect of a breach of either Condition 1 or Condition 2 in an accounting period is two; and

(b) the specified period is the ten year period beginning on the day on which the company first failed to satisfy one of those condition and ending immediately before the tenth anniversary of that day.

(3) Any breach of Condition 2 which is a necessary consequence of a contemporaneous breach of Condition 1 shall be disregarded in computing the number of breaches of—

(a) Condition 2; and

(b) the total number of breaches;

during any ten year period.

But the breach of Condition 1 giving rise to the breach of Condition 2 shall not be so disregarded.

This is subject to the following qualifications.

(4) If a breach of Condition 1 or 2 lasts for more than one, but not more than two, accounting periods, it constitutes only one breach for the purposes of paragraph (2).

(5) If in any three consecutive accounting periods a company fails to satisfy at least one of Conditions 1 and 2 the breach is not to be considered as minor and the company may not rely upon this regulation for the purposes of section 129(2)(a).