* Dilution levy cut from 17 to 7 pct
* Fair value adjustment of 7 pct in place
* Move follows slew of funds frozen post-Brexit (Adds comment from CEO and regulator, details)
LONDON, July 21 (Reuters) - Aberdeen Asset Management has reduced the levy on withdrawing from its UK propertyfunds, it said on Thursday, as a surge of investor redemptionrequests following Britain's vote to leave the European Unionbegan to slow.
Abdereen said it has reduced the dilution adjustment on itsUK Property fund and UK Property Feeder Unit Trust from 17 to 7percent.
The move reduces the hit that investors take for selling outof the fund. Aberdeen said the change reflects a reduction inthe volume of redemptions by investors in the last week and arise in its cash balances after a number of property sales.
"Our hope is that trading in the funds continues to revertto more normal levels. This should allow us, in time, to removethe dilution adjustment altogether," Aberdeen Chief ExecutiveMartin Gilbert said.
The asset manager lifted the suspension on investorswithdrawing money from the funds on July 13, after freezingexits in the wake of Britain's vote to leave the European Union,in common with several other property funds.
Andrew Bailey, chief executive of the Financial ConductAuthority which regulates property funds, told Britain'sparliament on Wednesday there was a need to avoid fire sales ofproperty to meet redemption requests from investors.
"The latest evidence we have is that the position isstabilising, the pattern of withdrawal requests versusinvestment requests has gone much more into balance," Baileysaid.
More than 18 billion pounds in UK commercial property fundsaimed at retail investors were frozen in early July following atide of redemption requests.
Aberdeen said it applied the dilution adjustment to reflectthe fact that properties would have to be sold for below marketvalue in order to provide liquidity.($1 = 0.7572 pounds) (Reporting By Lawrence White and Huw Jones; Editing by RachelArmstrong and Sinead Cruise)