For decades, many family offices have taken a deliberately conservative approach to property ownership. Prime residential and trophy commercial assets were often acquired outright, held unencumbered, and treated as long-term stores of wealth rather than actively leveraged investments.
This approach was shaped by a clear philosophy: avoid lender influence, preserve control, and minimise balance sheet volatility. In an environment of rising asset values and predictable rental demand, this strategy proved effective.
However, in 2025, a growing number of family offices are reassessing that position. Not because of financial pressure, but because the opportunity cost of holding large volumes of dormant equity has become increasingly difficult to justify.
Property-backed debt is now being used not as distress finance or yield enhancement, but as a deliberate balance sheet tool—designed to improve liquidity, capital efficiency, and intergenerational flexibility without compromising asset control.
At Willow Private Finance, we are seeing this shift first-hand. This article explores why property debt is being reconsidered at family office level, how lenders assess these structures, and where expert structuring makes the difference between productive leverage and unnecessary complexity.
The macroeconomic environment in 2025 is materially different from the conditions that shaped family office strategies over the past decade.
While interest rates remain higher than the ultra-low era of the 2010s, they are no longer viewed in isolation. Family offices are increasingly evaluating borrowing costs relative to alternative capital deployment opportunities, rather than against historic norms.
Private credit, structured debt, direct lending, infrastructure, private equity secondaries, and opportunistic real estate strategies are all competing for capital. Against this backdrop, holding £50m–£200m of unleveraged property equity often represents a drag on overall portfolio efficiency.
At the same time, regulatory complexity, tax planning considerations, and intergenerational wealth transfers are driving demand for liquidity without forced asset sales. Property-backed lending provides a controlled mechanism to achieve this.
The traditional aversion to property debt within family offices was not irrational. Leverage introduces counterparty risk, refinancing risk, and potential loss of autonomy if poorly structured.
What has changed is not the risk itself, but the tools available to manage it.
Modern private bank and specialist lending structures allow family offices to borrow at low loan-to-value ratios, often across diversified property pools, with long-dated facilities and minimal operational intrusion.
Rather than viewing debt as a speculative tool, family offices are now treating it as a capital reallocation mechanism—one that converts illiquid equity into deployable capital while preserving ownership and long-term exposure.
At family office level, property debt is rarely about maximising leverage. Instead, it is typically deployed conservatively, with loan-to-value ratios often ranging between 20% and 40%, depending on asset quality and jurisdiction.
This approach achieves several objectives simultaneously.
First, it introduces liquidity without triggering capital gains tax, stamp duty, or forced sales. Second, it improves capital efficiency by allowing property equity to support wider investment mandates. Third, it enables clearer separation between operating capital and legacy assets.
Crucially, when structured correctly, these facilities are designed to be non-disruptive. They sit quietly on the balance sheet, serviced comfortably from rental income or broader family cash flow, rather than relying on aggressive yield extraction.
While motivations vary, several recurring themes are driving family office demand for property-backed lending.
One is portfolio diversification. Rather than increasing exposure to property, families are unlocking equity to deploy into uncorrelated asset classes, reducing concentration risk.
Another is intergenerational planning. Liquidity created through borrowing can fund trusts, equalisation strategies between heirs, or structured gifting without fragmenting core property holdings.
There is also a growing role for property debt in opportunistic investment. Family offices with strong sourcing capabilities value the ability to move quickly when attractive opportunities arise, without waiting for asset disposals.
In each case, the debt is not the strategy—it is the enabler.
Private banks and specialist lenders assess family office borrowing very differently from standard investment finance.
The starting point is not income multiples or stress-tested affordability. Instead, lenders focus on net asset position, asset quality, jurisdictional risk, and governance structure.
They are particularly attentive to property concentration, geographic diversification, and the legal ownership framework—whether assets sit personally, within corporate structures, or across trusts.
Importantly, lenders also evaluate intent. Facilities framed as long-term balance sheet tools are viewed more favourably than those positioned as short-term yield plays. This distinction influences pricing, flexibility, and covenant structure.
For family offices, the headline interest rate is rarely the decisive factor.
Far more important are issues such as recourse, cross-collateralisation, prepayment flexibility, confidentiality, and the ability to manage facilities across jurisdictions.
Poorly structured debt can introduce unintended consequences—ranging from tax inefficiencies to restrictions on future asset transfers. Conversely, well-structured facilities can remain in place for decades, quietly supporting broader family objectives.
This is where independent structuring advice becomes critical. The optimal solution is rarely found in a single product or lender, but through careful alignment of debt terms with long-term balance sheet strategy.
One of the persistent concerns among family offices is loss of control. Modern lending structures address this through conservative leverage, transparent covenants, and negotiated flexibility around asset management decisions.
In many cases, lenders are comfortable with interest-only servicing, long-dated terms, and minimal amortisation, provided asset quality and sponsor strength are strong.
This allows family offices to maintain strategic control while benefiting from enhanced liquidity—a balance that was harder to achieve in earlier lending cycles.
The use of property debt as a balance sheet tool is unlikely to reverse. If anything, it is becoming more institutionalised within family office strategy.
As investment opportunities become more complex and capital allocation more dynamic, liquidity flexibility will continue to command a premium. Property, as one of the largest and most stable components of family wealth, is increasingly being used to support that flexibility.
The families adopting this approach early are not chasing leverage—they are optimising optionality.
Willow Private Finance works closely with family offices, private banks, and specialist lenders to structure bespoke property-backed lending solutions.
We focus on low-leverage, high-quality facilities designed to enhance liquidity, preserve control, and align with long-term family objectives.
Our role is to bridge the gap between asset strategy and lending execution, ensuring that debt supports the balance sheet rather than distorting it.
Q1: Why are family offices using property debt more actively in 2025?
A: Many are responding to the rising opportunity cost of holding large volumes of unleveraged property equity and seeking greater liquidity flexibility.
Q2: Is this about increasing leverage or reducing risk?
A: Typically neither. The objective is capital efficiency and balance sheet optimisation rather than yield enhancement.
Q3: What loan-to-value ratios are common for family office borrowing?
A: Most facilities are structured conservatively, often between 20% and 40% loan-to-value.
Q4: Does property debt affect intergenerational planning?
A: When structured correctly, it can enhance flexibility by creating liquidity without forcing asset sales.
Q5: Are private banks the only lenders for this type of finance?
A: No. Specialist lenders also play a role, particularly for complex or cross-border structures.
Q6: Is property debt suitable for all family offices?
A: No. Suitability depends on asset profile, governance structure, and long-term objectives.
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About the Author
Wesley Ranger is the Director of Willow Private Finance and has over 20 years of experience in complex property finance. He specialises in advising family offices, high-net-worth individuals, and international clients on bespoke lending structures, including multi-asset facilities and cross-border property finance. Wesley works closely with private banks and specialist lenders to deliver discreet, strategically aligned funding solutions.
Important Notice
This article is for general information purposes only and does not constitute personal financial or investment advice. Lending structures, tax treatment, and regulatory considerations vary depending on jurisdiction and individual circumstances and may change over time.
You should always seek tailored advice from qualified financial, legal, and tax professionals before entering into any property-backed lending arrangement.
Willow Private Finance Ltd is authorised and regulated by the Financial Conduct Authority (FCA No. 588422). Registered in England and Wales.
