FCA and Treasury Set to Reform Real Estate Fund Rules, Removing Barrier to Independent Valuations
The Financial Conduct Authority (FCA) and HM Treasury have announced plans to reform the regulatory framework governing London-listed real estate funds, aiming to streamline overlapping rules and address long-standing structural issues. A key element of the reform is the removal of external valuers’ unlimited liability, a change expected to significantly improve the integrity and functionality of independent fund valuations.
Under the current regime, external valuers can be held indefinitely liable for their assessments, a deterrent that has discouraged many professionals and firms from participating in the valuation process. This has contributed to a lack of independent oversight, raising concerns among investors about transparency and accountability in listed property funds.
The proposed reforms will introduce more balanced liability standards, aligning the UK with international norms and encouraging broader participation from valuation experts. The FCA and Treasury intend this shift to enhance market confidence and improve the accuracy of asset pricing, a cornerstone of a well-functioning real estate investment market.
Beyond liability reform, the initiative seeks to resolve inconsistencies between fund regulation and corporate governance requirements that apply to listed funds. These overlapping and often conflicting rules have historically created operational friction and increased compliance costs for fund managers.
Industry participants have welcomed the proposals, viewing them as a necessary step toward revitalizing the sector and attracting more institutional and global capital. The changes are expected to be particularly beneficial to alternative real estate segments, such as logistics, life sciences, and urban infrastructure, which require expert and independent valuation expertise.
The FCA and Treasury will open a consultation process in the coming months, with implementation anticipated later this year. If enacted as expected, these reforms could mark a turning point in the evolution of the UK’s real estate fund market, positioning London as a more efficient and globally competitive hub for property investment.
