Following the recent upsurge in interest in property funds, the Republic of Ireland’s financial regulator is currently undertaking a re-write of its property fund rules. In advance of a formal change of the rules, the financial regulator has been allowing greater flexibility on a case-by-case basis for new funds. It is our view that this flexibility will lead to new opportunities for property investors.
Three types of fund may be authorised by the financial regulator: funds sold to retail investors, professional investors (PIFs) and qualifying investors (QIFs). The minimum investment in a professional fund is 125,000 (£84,000) and 250,000 (£168,000) in a qualifying investor fund. For the QIF, the investor must also pass a net worth test. Greater flexibility is permitted by the financial regulator in the structuring of QIFs. For example, there are no regulatory limits to the amount of borrowing that a QIF may undertake, while a professional investor fund is currently limited to maximum borrowings of 50% of gross assets. It is expected that under the anticipated new rules, this cap on borrowings by professional funds will be extended.
