Budget 2012: Government to offer tax breaks on property deals to draw money into buy-to-let sector George Osborne, the Chancellor, is expected to confirm in the Budget this week that the Government will significantly loosen the regulations for Real Estate Investment Trusts, which do not pay capital gains tax on property. He plans to scrap the rule that investors must pay 2pc of the value of their portfolio to become a Reit and alter rules restricting Reits to companies listed on the London Stock Exchange so that landlords on smaller exchanges can also convert. The proposals are designed to allow pension funds to turn property portfolios into Reits and potentially allow buy-to-let investors to also benefit from capitals gain tax breaks. The buy-to-let sector has been left with a tarnished reputation following the financial crisis. Investors piled into high-rise apartments armed with cheap mortgages, only to be undone when prices began to fall. However, the Coalition believes that investment from pension funds and respected investors could fund new housing developments and create a significant private rental sector in the UK. There have been more than 20 Reits created since they were introduced in 2007, such as the UK's biggest listed property companies Land Securities and British Land. However, they are all focused on commercial property. Some property leaders are calling for Mr Osborne to go even further in the Budget. They want the requirement that Reits are listed to be scrapped, and the Government to allow property loans to be eligible for tax breaks.