Specialist buy-to-let mortgages:

Trusts, LLPs & FICs

Limited Liability Partnerships (LLPs), trusts and Family Investment Companies (FICs) can all be used to own investment property. However, these structures are accepted by a relatively small number of specialist lenders.

The mortgage market is considerably narrower than for personal ownership or a straightforward property SPV. The lender must understand who owns, controls and benefits from the structure, who can authorise borrowing and which individuals or entities will be responsible if the mortgage defaults.

Read more about SPV mortgages here.

A specialist lender market

Some lenders accept LLPs but not trusts, while others may consider simple UK trusts or FICs but will not accept corporate members, overseas entities or layered ownership.

These applications rarely fit a standard automated process. They often need to be discussed with a specialist lender before an application is submitted, supported by a structure chart and the relevant company, partnership or trust documents.

Private banks can also provide an important source of finance, particularly for larger loans and clients with substantial assets or a wider banking relationship. They may be more comfortable examining bespoke ownership and succession structures, although they can require assets under management, minimum wealth levels or additional security.

The lender pool can reduce further where the structure includes:

  • Corporate or professional trustees

  • Corporate members of an LLP

  • Trusts or companies registered overseas

  • Multiple generations of beneficiaries or shareholders

  • Different classes of shares

  • Layered companies or trusts

  • Individuals unwilling to provide personal guarantees

Using an experienced specialist mortgage broker is particularly important in identifying which lenders or private banks will accept the complete structure.

Limited Liability Partnerships

An LLP is a separate legal entity owned by its members rather than shareholders. It can own property, enter contracts and take out mortgages in its own name.

Lenders accepting LLPs may require their sole or principal activity to be buying and letting property. All designated members, and sometimes every member with management rights, may need to join the application, undergo personal assessment and provide joint and several personal guarantees.

Corporate members can reduce the lender choice further. The LLP agreement must also permit property investment, borrowing and the granting of security. Some lenders may take a floating charge over the LLP’s wider assets in addition to a legal charge over the property.

Trust ownership

With trust-owned property, the trustees hold and manage the asset for the beneficiaries in accordance with the trust deed. Trusts may be discretionary, life-interest, bare or established under a will, and each creates a different lending position.

The trust deed must give the trustees sufficient powers to purchase property, borrow money and grant security. The lender’s solicitor will normally review the complete deed and subsequent amendments.

Information and identification documents may be required for the trustees, settlor, beneficiaries, protector and anyone exercising control or providing guarantees. Overseas trusts and structures involving several jurisdictions require enhanced legal and source-of-wealth checks.

If a beneficiary or connected family member will occupy the property, the mortgage may fall within regulated lending rules rather than ordinary business buy-to-let.

Family Investment Companies

A Family Investment Company is generally a private limited company established to hold and manage family wealth. It is not a separate legal category of company, and its mortgage treatment depends on its activities and ownership.

A simple FIC used only to own and let property may fit some lenders’ SPV criteria. More complex FICs may include different share classes, voting arrangements and rights to income or capital across several generations. Shares may also be held by trusts or other companies.

The lender will examine who ultimately owns and controls the FIC, who can authorise borrowing and who must provide personal guarantees. A structure intended to pass wealth between generations may not suit a lender requiring every significant shareholder to guarantee the mortgage.

Affordability and professional advice

Affordability is generally assessed against the property’s expected rent, although the wider assets and liabilities of the structure may also be considered.

See Rental assessments & affordability calculations for more detail.

These arrangements can provide valuable flexibility for joint investment, succession planning and managing family assets. Their documents, guarantees, source of funds and future ownership plans should be reviewed before a property is purchased. Specialist mortgage, private banking, legal, tax, trust and accountancy advice may all be required.