The Reserved Investor Fund (RIF), a new type of UK-based contractual investment scheme, was launched on 19 March 2025. The RIF was originally proposed by the previous government, in response to industry demand for a closed-ended investment vehicle for institutional investors to hold real estate investments. RIFs are structured as unauthorised co-ownership alternative investment funds and will not require FCA authorisation or registration with Companies House.
The RIF is anticipated to be a popular vehicle for investment in UK-based commercial real estate, as well as in infrastructure, private equity and private debt, particularly by institutional investors such as pension funds. It is also intended to support the government’s growth agenda by facilitating both real estate investment and onshore investment.
Fund managers are now able to launch or convert existing structures into a RIF.
So how did we get here? In 2020 the UK government undertook a review of the UK funds regime, and found that UK asset managers are sometimes forced offshore with all of the associated challenges and costs of dealing with multiple legal, tax and regulatory regimes. Industry feedback suggested that there was a gap in the UK market for a new contractual scheme which was available to professional and institutional investors, including pension funds. It was suggested that it should be open to all asset classes, and was likely to be particularly of interest to investors in commercial real estate.
In response to these findings, the government introduced the RIF, with the aim of making the UK a more attractive location to set up, manage and administer funds.
In terms of structure, a RIF, as a contractual scheme, is formed by deed between its operator and a depositary. The depositary will hold legal title to the RIF’s assets (whether property or otherwise) on behalf of the participants as tenants in common.
For regulatory purposes, the RIF must be structured as a UK alternative investment fund (AIF). It is therefore required to have a UK alternative investment fund manager (AIFM), which needs to be FCA-authorised or registered, and which will act as the RIF operator. The AIFM will make investment decisions on behalf of the RIF. The RIF itself does not need to be authorised, and should therefore be quicker and easier to launch than an FCA-authorised fund.
RIFs are, however, subject to FCA rules relating to marketing and financial promotions, and can generally only be marketed to professional, sophisticated and high-net-worth investors.
From a tax perspective, the RIF is modelled on co-ownership contractual schemes and so much of the tax treatment is similar. With regards to income tax, the RIF is transparent, and so is not subject to corporation tax or income tax on income received. From an investor’s perspective, RIFs are opaque, so investors would not generally be subject to tax on gains made on disposals or assets, subject to certain conditions and depending on their own status.
RIFs are subject to the standard stamp duty land tax (SDLT) rules when making acquisitions of chargeable interests in land. However, subject to certain conditions, SDLT seeding relief is available for a transaction.
So what are the benefits of a RIF? The RIF is a UK fund structure that offers fund managers, and their investors including institutional investors such as pension funds, a variety of options and benefits.
The RIF provides valuable flexibility as it can be closed-ended or hybrid. Launch and operational costs will be reduced as it is subject to a light-touch regulatory regime. The RIF will also offer an attractive solution to those seeking an accelerated speed to market launch, as there is no need for prior registration with Companies House. Finally, there are the tax benefits, including the availability of SDLT seeding relief.
The RIF is a promising new investment fund structure. It provides a new and useful tool for those looking at structuring UK property investment funds and investors looking for onshore options. It complements existing structuring options such as vehicles based in offshore jurisdictions or REITs.
It should go some way to addressing industry concern that potential investors are deterred by the red tape and loss of privacy involved in investing in UK real estate compared with other jurisdictions.
