Trust Structures We Work With
Most of the trust cases we arrange fall into a few familiar patterns. The most common is a discretionary or family trust, usually established in Jersey, Guernsey, the Isle of Man, the British Virgin Islands or Cayman, which owns UK property through a single-purpose holding company. In others, the trustees hold the property directly and are named as legal owners on the title. We also work with life-interest and fixed-interest trusts, and with trusts that sit at the top of a layered group of companies spanning several jurisdictions.
Whatever the structure, the starting point is the same: we look at who the trustees are, what the trust deed permits, and who ultimately benefits from and influences decisions about the trust. Our in-house tax specialists then work alongside your own legal advisers to make sure the borrowing fits the wider structure.
Why Trustees Borrow Against UK Property
Borrowing within a trust is usually a practical decision rather than a defensive one. The reasons we see most often are:
Releasing capital without selling — trustees can raise funds against a property the family intends to hold for the long term, rather than being forced into a sale.
Funding beneficiaries' needs — raising cash for education, housing or other distributions where the trust deed allows it, without breaking up the trust's assets.
Acquiring or improving property — financing the purchase, refurbishment or development of further UK assets held within the trust.
Refinancing existing debt — replacing a maturing or expensive facility, including loans from private banks that no longer suit the structure.
Keeping the structure intact — borrowing against the property avoids a disposal that could disturb succession planning or trigger tax charges.
The common thread is that trustees must act within their powers and in the interests of the beneficiaries. A lending case that respects both is one a lender can approve with confidence.
What Lenders Need to See From a Trust
A trust is not a legal entity, so the borrower is either the trustees acting in that capacity or a company the trust owns. In both cases the lender will want to be satisfied of three things: that the trustees have the power to borrow and to grant security over the property; that the people behind the trust are identified and verified; and that the loan can be repaid from clear and legitimate sources. Lenders also tend to be most comfortable where the trust is administered by a regulated, professional trustee in a well-established jurisdiction, which makes the choice of trustee as important as the choice of jurisdiction.
Where trustees borrow in their own name, their liability is often limited to the trust assets, so a lender may ask for additional support, such as a guarantee from a connected company or individual. Where legal title to the property sits with an overseas company, including a corporate trustee, the Register of Overseas Entities rules apply: the entity must hold a valid Overseas Entity ID before it can grant a registered legal charge over UK property. We check this before a case ever reaches a lender.
