There were also parts of the industry that felt the 180-day notice period would not go far enough to protect consumers from harm.
Ian Sayers, chief executive of the Association of Investment Companies, said although notice periods were the “right answer”, the 180 days was “not long enough” to sell properties in an orderly way in all market conditions.
He said the UK should mirror Germany, which has a one-year notice period, saying such a wait would "protect the integrity of markets, work for investors and is commercially viable.”
Issues surrounding illiquid holdings in property open-ended funds have been highlighted on several occasions in recent years, most notably by the suspension of all UK property funds available to retail investors, with £12.8bn of assets between them, in the third week of March.
The portfolios were gated because the coronavirus crisis had caused “material uncertainty” in the UK property market, meaning valuers were unable to value the assets within the funds with the same degree of certainty as would otherwise be the case.
The illiquid nature of property meant a reliable price was not always readily available. This also sparked a number of funds to gate in the wake of the EU Referendum.
High levels of redemptions can also cause a fund's suspension, such as when M&G suspended its £2.5bn property portfolio fund in December.
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