IFM04120 - Property authorised investment funds (PAIFs): introduction and conditions of membership for the regime: overview of conditions

The PAIF regime is elective. The manager of the fund, or proposed manager, must give advance notice in writing that it wants the PAIF rules to apply from a given date to the fund, its distributions and investors who receive those distributions. The fund must be an open-ended investment company (OEIC), as defined in section 236 Financial Services and Markets Act 2000 (FSMA) and regulated by the Financial Services Authority (FSA) and meet the following conditions:

• the property investment business condition (IFM04130);
• the genuine diversity of ownership condition (IFM04160);
• the corporate ownership condition (IFM04170);
• the loan creditor condition (IFM04180); and
• the balance of business condition (IFM04190).

The manager must also give notice that the OEIC will be a PAIF and obtain any shareholder and regulatory approvals – see IFM04220.

The conditions have to be met throughout the period the PAIF wants to be within the regime. Once HMRC accept that the OEIC meets the conditions, the regime applies from the date specified in the original notice, and not from the day the notice is given. Further information is given on this in IFM04220.