Q&As

Are property investment arrangements collective investment schemes?

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Published on LexisPSL on 29/11/2013

The following Financial Services Q&A provides comprehensive and up to date legal information covering:

  • Are property investment arrangements collective investment schemes?
  • What is a collective investment scheme and do property investment schemes fall within the definition?
  • If investors own individual properties in arrangements managed by a third party, will this be a collective investment scheme?
  • What is meant by day-to-day control?
  • If an investor invests in a property arrangement through a company, will this be a collective investment scheme?
  • If an investment property arrangement is a collective investment scheme, what are the authorisation requirements?

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

What is a collective investment scheme and do property investment schemes fall within the definition?

A collective investment scheme is defined in section 235 of the Financial Services and Markets Act 2000. Broadly speaking, a collective investment scheme is any arrangement:

  1. which enables participants to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property,

  2. where participants do not have day-to-day control over the management of the property, and

  3. where either the contributions and profits or income are pooled, or the property is managed as a whole by or on behalf of the scheme operator, or both.

Whether or not a property investment arrangement is a collective investment scheme depends on its individual structure and the facts surrounding it. If the arrangement meets the conditions set out below and is not exempt, then its operation and promotion will likely come under Financial Conduct Authority (FCA)

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