Trusts have long been used by high-net-worth families to preserve wealth, manage succession, and protect assets across generations. Yet when it comes to property finance, trusts often sit in a grey zone. Lenders either embrace them—or avoid them entirely. In 2025, that picture is shifting fast.
Rising inheritance tax pressures, increasing cross-border ownership, and a surge of intergenerational planning mean more clients are considering trusts as part of their property strategy. As a result, lenders are being forced to adapt. But their attitudes vary widely, and many borrowers still underestimate how complex trust-owned property can appear to a credit committee.
This article explores why trusts are increasingly relevant, what lenders worry about, how their criteria are changing in 2025, and what families must prepare before approaching the market. Throughout, we reference related Willow Private Finance resources—such as our guidance on
High Net Worth Mortgages in 2025 and
Inheritance Tax Planning With Whole of Life Policies—to help you build a complete picture of the modern lending landscape.
Willow Private Finance has arranged numerous trust-based transactions for both UK and international families. This article reflects our on-the-ground experience of what lenders now expect—and the strategies that lead to smooth approvals.
Why Trusts Matter More in 2025
Trust ownership is no longer niche. Families are increasingly incorporating trusts as part of a broader wealth strategy, driven by four major factors shaping the 2025 environment.
First, inheritance tax exposure continues to rise, especially for families with multiple properties or internationally held assets. Trusts can provide structure and clarity when planning for long-term succession and mitigating unnecessary tax burdens.
Second, cross-border family arrangements are becoming the norm rather than the exception. Many high-value clients have beneficiaries in multiple jurisdictions, mixed tax residency, or complex marital circumstances. A trust can act as a neutral and stable holding structure where assets are separated from individual personal circumstances.
Third, generational wealth transfer is now a defining trend. Many clients in their 50s and 60s are restructuring their portfolios to ensure a smooth transition of property assets to children or grandchildren without exposing the family to long probate delays or fragmented ownership.
Finally, lenders themselves recognise that the private client market is evolving. Trusts are increasingly a sign of financial sophistication—not an indicator of risk. But this shift brings its own challenges.
How Trusts Work in Property Ownership
A trust separates legal ownership from beneficial ownership. The trustee holds legal title to the property and is responsible for managing it, while the beneficiaries enjoy the economic benefits.
For property finance, this distinction matters. The lender needs absolute clarity on:
- Who controls the asset?
- Who benefits from it financially?
- Who is responsible for repayment?
- Who provides personal guarantees, if required?
This differs significantly from a purchase in an individual or company name. Without clear documentation, lenders cannot assess risk properly, which historically led many mainstream banks to reject trust-owned applications entirely.
But in 2025, specialist lenders, private banks, and international financiers are far more comfortable dealing with trusts—provided the structure is fully transparent and logically presented.
Common Reasons Families Use Trusts to Hold Property
Most families and high-net-worth individuals use trusts for a combination of strategic, tax-efficient, and long-term planning reasons.
Trusts allow families to ring-fence assets from claims, disputes, or the financial behaviour of individual beneficiaries. For parents concerned about relationship breakdowns, business failures, or creditor risk amongst the next generation, holding property within a trust provides stability and security.
A trust also ensures orderly succession. Rather than splitting ownership among multiple heirs—potentially causing tax issues or disputes—a trust centralises control and distributes benefits according to pre-agreed rules.
Families with international ties often use trusts to simplify cross-border inheritance. For example, a UK property held in trust can avoid forced-heirship rules in other jurisdictions, making estate planning more predictable.
The appeal is clear. But lenders do not always share the same enthusiasm.
Why Lenders Historically Hesitated With Trust Structures
Lender caution has traditionally stemmed from complexity rather than risk. Many lenders simply did not understand trust mechanics well enough to lend confidently. Several issues commonly arose during underwriting.
Complex Legal Layers
Some lenders lack in-house private client expertise. If a trust deed includes discretionary powers, protector roles, multiple beneficiaries, or offshore elements, the lender must work harder to understand who is ultimately responsible for the loan.
Title and Beneficial Ownership Issues
When the trustee holds legal title but a beneficiary occupies the property or receives rental income, lenders must map out the chain of responsibility. This often slows approvals unless the application is packaged clearly.
Default Enforcement Concerns
Lenders want assurance that, in a worst-case scenario, they can enforce their security. Some trusts create perceived barriers—or, at minimum, more procedural steps.
AML and KYC Complexity
A trust could involve:
- A settlor
- One or multiple trustees
- A protector
- Named beneficiaries
- Potential future beneficiaries
From an AML standpoint, each must be verified. With offshore trustees or beneficiaries, this becomes more involved.
As a result, many mainstream lenders historically declined trust applications simply because they required too much work compared with a standard mortgage.
What’s Changing in 2025
In 2025, lenders are becoming significantly more open to trust-based ownership. Several key developments are driving this shift.
More Private Banks Target Trust-Holding Clients
The private banking market is expanding its property lending offering, seeking wealthy families, international clients, and long-term relationship opportunities. Trusts are now seen as part of the profile, not an obstacle.
This trend is visible across the high-value lending landscape, complementing what we’ve covered in
Financing Luxury Property in the UK.
Digital ID Improvements Simplify Compliance
Enhanced digital KYC, global ID databases, and improved corporate/trust verification tools mean AML checks are faster and more reliable—even for offshore structures.
Growing Lender Familiarity With Offshore Trusts
Leading lenders now have specialists who understand Guernsey, Jersey, BVI, Cayman, and Luxembourg trust arrangements. As long as a structure is tax-compliant and transparent, the presence of an offshore trustee is no longer a dealbreaker.
Better Packaging by Brokers
Experienced brokers now lay out trust structures in clear diagrams and explanations, dramatically reducing lender friction.
In other words, "trust = complexity" is no longer the default assumption. The narrative in 2025 is: “I will lend—just help me understand the structure.”
What Lenders Want to See in a Trust-Owned Property Application
A successful application depends on clarity and transparency. The lender must see enough detail to understand risk, responsibility, and control.
A Clear Trust Deed and Structure
The deed must outline:
- trustees
- beneficiaries
- powers
- succession arrangements
- decision-making processes
The lender will review this in detail.
A Strong Trustee Profile
A professional or corporate trustee gives lenders confidence. Amateur family trustees can still work, but documentation must clearly show they have the authority to act.
Verifiable Source of Funds
Deposits, gifts, loans, distributions, or trust transfers must be fully documented. Lenders will request:
- bank statements
- trust bank records
- evidence of settlements into the trust
Transparent Offshore Elements
If any part of the structure involves an offshore entity, lenders expect:
- tax residency documentation
- trustee verification
- confirmation of regulatory status
- written explanations for why the structure exists
A Well-Packaged, Fully Explained Application
The broker must tie everything together clearly—ideally in a covering note or structure diagram. This often decides whether a mainstream, private, or specialist lender will proceed.
When a Trust Structure Works Best
A trust can be an excellent vehicle for property ownership when used intentionally and with a clear purpose.
Families often benefit from a trust when they want to protect assets from potential future claims, ensure intergenerational control, or simplify complex international tax issues. Trusts also align well with high-value property strategies, particularly when used alongside structures such as family investment companies or long-term estate plans.
However, the structure must be designed with lending in mind. A poorly drafted trust deed, uncooperative trustees, or ambiguous beneficiary rights can make lenders nervous—even if the underlying wealth is substantial.
As with any sophisticated planning strategy, execution matters.
How Willow Private Finance Helps Navigate Trust Lending
Trust-lending is a niche area. Lenders vary widely in appetite, internal expertise, and documentation requirements.
At Willow Private Finance, we regularly work with:
- UK family trusts acquiring or refinancing prime London property
- Offshore discretionary trusts purchasing student accommodation or investment assets
- Multigenerational family trusts restructuring property portfolios for tax planning
We understand which lenders are open to trust ownership, how to present the structure clearly, and what compliance teams need to see before signing off. Our role is to reduce friction, streamline documentation, and secure competitive terms—especially for high-value and cross-border clients.
Whether you are setting up a new trust, buying through an existing one, or refinancing a long-held asset, we ensure your application is structured in a way lenders understand and approve.
Frequently Asked Questions
Q1: Can a trust get a mortgage in the UK in 2025?
Yes. While mainstream lenders may be cautious, many private banks and specialist lenders are increasingly comfortable lending to trusts—provided the structure is clearly explained and compliant.
Q2: Do trustees need to provide personal guarantees?
In most cases, yes, especially where the trustee is an individual. Corporate trustees may provide different forms of covenant or security depending on the trust's assets.
Q3: Are offshore trusts acceptable to UK lenders?
Yes, but only when fully transparent, tax-compliant, and properly documented. AML verification must be comprehensive.
Q4: Can beneficiaries live in a trust-owned property?
Yes, but lenders need clarity on beneficial ownership, occupancy rights, and repayment responsibility. Some lenders restrict regulated lending to trust structures.
Q5: Does a trust help with inheritance tax for property?
A trust can form part of an IHT plan, but suitability depends on the type of trust, tax residency, and long-term strategy. Independent tax advice is essential.
Q6: What documents will a lender review for a trust mortgage?
Typically: the trust deed, trustee ID, beneficiary information, source of funds evidence, tax residency documentation, and a clear explanation of the structure.
📞 Want Help Navigating Today’s Market?
Book a free strategy call with one of our mortgage specialists.
We’ll help you find the smartest way forward—whatever rates do next.
