The ways in which real estate investment trusts are taxed, treated and even how many properties they can hold could change as part of a wide-ranging government consultation on the future of the country’s £9.9tn funds industry.

The Treasury’s review of the UK’s fund regime is aimed at encouraging a greater number of funds to set up shop in the UK.

John Glen, economic secretary to the Treasury, said that growing the number of funds based in the UK could also help to create jobs outside of London, meeting the government’s goal of “levelling up” regional economies.

The consultation document singles out REITs as a segment of the market that could be overhauled, pointing to a perception of “unnecessary barriers and complexity” in property investment, which it described as “a key element” of the UK’s asset management industry.

The Treasury said the REIT rules, which came into force in 2007, “can be complex” and said several changes could now be made “where certain rules no longer serve their original purpose or could be simplified”.

The paper highlights four possible changes to the REIT regime and has asked the industry for views on what impact the proposals would have.

The first is doing away with the potentially “burdensome” interest cover test, which can see some large REITs pay a charge based on their financing-to-cost ratio in addition to being subject to the corporate interest restriction.

Second is a suggestion to amend the rule deciding how profits or loss on a disposal are treated if a REIT sells an asset it looked to hold on to within three years of completing significant development work.

The Treasury is also considering changing a rule that means REITs must hold at least three properties, based on a suggestion that single-property REITs may make the UK regime be “more attractive to investors”.

Finally, the consultation asks for views on changing rules that currently see UK-based REITs holding overseas properties having to pay tax in the overseas jurisdiction as well as the tax withheld in the UK to pay income to investors.

The consultation asks for views on whether changes in these four areas would lead to greater investment in UK REITs or encourage new REITs to establish themselves in the UK.